The chief executives of United Technologies Corp. and Raytheon Co. on Monday defended the proposed merger of their companies to skeptical industry analysts, the second time in a week they explained the rationale for the massive aerospace and defense tie-up.
Investors haven't warmed to the deal, which would create a rebranded Raytheon Technologies Corp. with annual revenue of about $75 billion. UTC's share price has fallen 6% since June 7, the last trading day before the deal was announced the following Sunday. Raytheon is down about 3.3 percent.
UTC closed Monday at $124.22, down less than 1 percent. Raytheon ended the day at $179.80, up less than 1.5 percent.
"Look, I know it caught everybody by surprise," Greg Hayes, UTC's chief executive officer, told analysts at a presentation at the Paris Air Show, an annual industry gathering that began Monday. "But at the end of the day as you step back and you think what was the next logical step for the UTC aerospace business, it was exactly this."
Thomas Kennedy, CEO of the Waltham, Mass.-based Raytheon, said the merger will capitalize on rising military spending.
"I can tell you there is strong support for defense moving forward," he said.
The two CEOs said the deal is a money maker.
"We believe over the next five years, we will grow sales. We will grow profit faster than sales and we will grow cash faster than profit," Kennedy said.
Hayes said the merged business will be a "cash machine" that gives management options to return money to shareholders and invest in technology.
The proposed merger is under review by the Defense Department. The Justice Department will also assess whether the proposed deal violates federal antitrust laws.