The planned merger between Raytheon (NYSE: RTN) and United Technologies Corp. (NYSE: UTX) comes as the aerospace-and-defense sector anticipates slower growth in the Department of Defense’s spending and as DoD sets its sights on hypersonic missiles, space systems and other new priorities, The Wall Street Journal reported Wednesday.
As the number of weapons platforms has dwindled, Pierre Chao, a defense consultant at Renaissance Strategic Advisors, said policymakers should not be surprised about the consolidation in the A&D industry.
“We’ve let market forces create the ‘bigs,’” Chao said.
Some analysts noted that the proposed Raytheon-UTC combination is likely within an acceptable degree since both companies do not produce the same lines of products.
“I feel this proposed merger is right at the line of what would be allowable,” said Andrew Hunter, a senior fellow at the Center for Strategic and International Studies.
President Donald Trump “expressed concern ‘if they have the same products,’” said Byron Callan, an analyst with Capital Alpha Partners. “They don’t.”