20170521w_biz_rockwell (copy) (copy)

A crash-test dummy is strapped into an aircraft seating module on a crash sled for a test at an engineering development lab at UTC in Winston-Salem.

More than 1,500 Winston-Salem employees of United Technologies Corp. may have a new employer and owner for the fourth time in just more than two years, according to U.S. and United Kingdom media reports.

First reported by the Wall Street Journal, the speculation is that UTC may announce merging its aerospace business with Raytheon as early as Monday. It would form a military equipment giant with combined annual revenue exceeding $110 billion.

The initial Wall Street Journal report is based on "people briefed on the matter."

UTC officials could not be immediately reached for comment Sunday on the reports. It did not have comment on the Wall Street Journal report.

The companies have little overlap when it comes to aerospace industry sales, which may bode well for lessening the impact on local employees.

It is not clear whether UTC or Raytheon will emerge as the acquirer in what it supposed to be an all-stock merger of equals along the lines of the BB&T Corp. and SunTrust Banks Inc. megadeal announced Feb. 7.

In that deal, BB&T shareholders will own 57% of the combined bank's stock and Kelly King, BB&T's chairman and chief executive, will have the same roles at the outset.

Media reports have Gregory Hayes, UTC chairman, chief executive and president, serving as chief executive and Raytheon's Thomas Kennedy as chairman.

The chain of events affecting the local workforce began in April 2017 when Rockwell Collins Inc. spent $8.6 billion to buy B/E.

Rockwell eliminated at least 534 former B/E Aerospace jobs companywide, including at least 100 locally, and closed a former B/E plant in Arizona.

UTC spent $30 billion, including assuming $7 billion on Rockwell Collins debt, in a deal announced in September 2017 and closed on Nov. 27, 2018.

The UTC-Raytheon merger is not expected to affect UTC's spin-off plans of its Otis and Carrier businesses into separately publicly traded companies in 2020. Otis is the world’s leading manufacturer of elevators, escalators and moving walkways. Carrier is a global provider of HVAC, refrigeration, building automation, fire safety and security products.

UTC had been under significant shareholder pressures for several months, particularly from billionaire hedge-fund activists Daniel Loeb and Bill Ackman, to create three independent companies to generate higher revenue and profit levels.

The deal is expected to face significant U.S. and global regulatory scrutiny, particularly given the trade war between China and the Trump administration.

The UTC-Rockwell Collins megadeal faced a nearly two-month delay in approval from the Chinese government after the deal had gotten U.S.(Oct. 2, 2018) and European (May 4, 2018) approvals.

That deal, which was supposed to have closed by July 1, 2018, wound up being completed on Nov. 27, 2018 — just three days after Chinese regulatory approval was secured.

In each case, UTC was required to divest certain businesses before regulatory approval was given.

Combined, UTC and Raytheon would have had $24.3 billion in U.S. defense spending in 2018, trailing second-place Boeing at $27.4 billion.

UTC has about 2,500 employees overall in N.C., which has announced plans to add another 1,500 in a major expansion that could be put on hold with the Raytheon merger.

UTC has four main operating segments: Collins Aerospace Systems had $6.5 billion in first quarter sales, up 70.6%; Pratt & Whitney had $4.82 billion, up 11.3%; Carrier had $4.32 billion, down 1.2%; and Otis had $3.09 billion, up 1.9%.

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rcraver@wsjournal.com

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