The board of United Technologies Corp. has approved the spinoff of the company’s Carrier heating and cooling and Otis elevator subsidiaries, keeping its planned merger with Raytheon Co. on track.
UTC’s spinoff of Carrier Global Corp. and Otis Worldwide Corp. was a condition of the merger agreement with Raytheon announced last June, which includes Tucson-based Raytheon Missile Systems and creates the world’s second-largest aerospace and defense firm.
UTC said on Wednesday that its board declared a pro-rata dividend of Carrier common stock and Otis common stock to be paid April 3 to UTC shareowners of record as of March 19.
UTC shareholders will retain their shares of UTC common stock, and Carrier and Otis stock will be publicly traded on the New York Stock exchange, the company said.
UTC Chairman and CEO Gregory Hayes said that Carrier and Otis are well-positioned for growth as standalone companies.
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“Executing the separations of Carrier and Otis is also a major milestone to completing the merger of UTC’s aerospace businesses with Raytheon to create Raytheon Technologies, the premier aerospace and defense systems and services provider,” Hayes said.
Shareholders of UTC and Raytheon approved the merger in October, and the deal is expected to be finalized in the second quarter of this year, subject to final regulatory approvals.
The deal still needs to clear an antitrust review by the Justice Department, in consultation with the Department of Defense, though Pentagon officials have said they have no major concerns about the deal.
Raytheon business is focused on weapon systems and defense electronics, while United Technologies makes jet engines through its Pratt & Whitney business and aircraft avionics through its Collins Aerospace subsidiary.
In January, BAE Systems announced agreements to buy Collins Aerospace’s Military Global Positioning System business and Raytheon’s airborne tactical radios business, alleviating some product crossover that could raise anti-trust concerns.
Under the merger plan, Raytheon Missile Systems — the Tucson region’s biggest employer with more than 13,000 local workers — would be combined with Raytheon’s Integrated Defense Systems unit, which is based near Boston, to form the new Raytheon Missiles & Defense, which Raytheon officials have confirmed will be based in Tucson.
