Raytheon and United Technologies hold 'joint kickoff' for integration work

By Marjorie Censer  / July 26, 2019

Raytheon and United Technologies this week held a "joint kickoff" event for their integration process, according to a top Raytheon executive.

In an interview with Inside Defense Thursday, Toby O’Brien, Raytheon's chief financial officer, said the two companies "have done some planning over the last couple weeks specifically related to integration."

"We've got a joint kickoff going on [Thursday] and [Friday] with our team, the UTC team," he added, noting third parties are also involved to create a "clean team" that can manage proprietary information because the deal is not complete.

The kickoff event, O'Brien said, is partly a social effort so that representatives of the two companies can get to know each other but also a "working session because it's laying out what the tenets around the integration planning are."

O’Brien said about 60 to 70 people from both companies are involved at this point, but that figure will grow. They are arranged in teams; for instance, a finance team includes representatives in that area from both Raytheon and UTC.

"Come Monday, these teams will be off and running from this kickoff," he said. "They're going to be the traffic cops for each one of the workstreams that we have set up."

O’Brien also said Raytheon is focused on ensuring it retains top talent as the integration process proceeds.

"It's human nature that people just are going to have a lot of questions, so we’re prepared for that," he said, adding that Raytheon is seeking to communicate that there won't be major changes below the business leadership level.

"The demand for talent, especially technical talent, into industry is at all-time highs," O'Brien said. "So, this is a big focus area for us."

Both Raytheon and United Technologies executives have said one of the merger's key benefits is that it will allow for a larger pool of research and development funding. The two have estimated the combined company's research and development budget, including company- and customer-funded work, will total $8 billion.

O’Brien said each of the new company's businesses will "get a fair share" of the R&D -- but that doesn't mean it will be evenly divided.

"Nothing has been decided," he said. But "I am sure it will be disproportionate. If it was split evenly, it would just be coincidental."

He said the new company will use a "disciplined process" to allocate the funds.

O'Brien also said the merger with United Technologies could generate new opportunities in foreign sales. Today, about 30 percent of Raytheon's sales are international, while the new company would have about 45 percent in international sales, according to briefing slides released when the deal was announced.

The combined company could see synergy in market channels, he said.

For instance, United Technologies has a "real strong physical presence in Poland," he said. "From a Raytheon point of view, we're just getting started there . . . but there's more business we want to do there."