Item 1.01 Entry Into a Material Definitive Agreement.
On March 9, 2020, United Technologies Corporation (the "Company" or "UTC"),
Light Merger Sub Corp. ("Merger Sub") and Raytheon Company ("Raytheon") entered
into Amendment No. 1 ("Amendment No. 1") to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of June 9, 2019, by and among UTC, Merger Sub
and Raytheon.
As previously disclosed and pursuant to the Merger Agreement, effective as of
the effective time of the merger of Merger Sub with and into Raytheon (the
"Merger"), the board of directors of the Company will be comprised of 15
directors, of whom eight will be individuals who were members of the board of
directors of the Company (including the Chief Executive Officer ("CEO") of the
Company) (collectively, the "UTC Continuing Directors") immediately prior to the
effective time of the Merger, and seven will be individuals who were members of
the board of directors of Raytheon (the "Raytheon Board") (including the CEO of
Raytheon) immediately prior to the effective time of the Merger.
As described below in Item 5.02 of this Current Report on Form 8-K, on March 11,
2020, the Board of Directors of UTC (the "UTC Board") accepted the resignation
of two members from the UTC Board effective as of immediately prior to the
effective time of, and contingent upon, the Merger, and the UTC Board appointed
Mr. Robert (Kelly) Ortberg to fill the vacancy that will be created by one of
the resignations and to serve on the UTC Board effective as of immediately prior
to the effective time of, and contingent upon, the Merger. Because Mr. Ortberg,
as Special Advisor to the Office of the Chairman & CEO of the Company, will not
qualify as an "independent director" under the listing standards of the New York
Stock Exchange (the "NYSE") and the applicable rules of the Securities and
Exchange Commission (the "SEC"), UTC, Merger Sub and Raytheon have entered into
Amendment No. 1, which amends the Merger Agreement to provide that at least six,
rather than all, of the seven UTC Continuing Directors (and other than the CEO
of the Company) will qualify as an "independent director" under the listing
standards of the NYSE and the applicable rules of the SEC, and to make certain
related changes to the bylaws of the combined company attached to the Merger
Agreement as Annex A in connection with this change.
Other than as expressly modified pursuant to Amendment No. 1, the Merger
Agreement remains in full force and effect as originally executed on June 9,
2019. The foregoing description of Amendment No. 1 does not purport to be
complete and is subject to, and qualified in its entirety by, the full text of
Amendment No. 1 attached hereto as Exhibit 2.1 to this Current Report on Form
8-K, which is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On March 11, 2020, in connection with the previously announced separation (the
"Separation") of UTC into three independent, publicly-traded companies, (1) UTC,
which will combine with Raytheon in the Merger; (2) Otis Worldwide Corporation
("Otis") and (3) Carrier Global Corporation ("Carrier"), Messrs. Christopher J.
Kearney and Harold W. McGraw III, current directors of UTC, were appointed to
serve on the Otis Board of Directors, and Messrs. John V. Faraci and Jean-Pierre
Garnier, current directors of UTC, were appointed to serve on the Carrier Board
of Directors, in each case effective as of immediately prior to the effective
time of, and contingent upon, the applicable Distribution (as defined below).
Accordingly, the UTC Board accepted their respective resignations from the UTC
Board, in each case effective as of immediately prior to the effective time of,
and contingent upon, the applicable Distribution.
Mrs. Ellen J. Kullman and Ms. Diane M. Bryant each recently assumed chief
executive officer positions at outside companies. As a result of this increase
in outside responsibilities, on March 11, 2020, the UTC Board accepted Mrs.
Kullman's and Ms. Bryant's respective resignations from the UTC Board in each
case effective as of immediately prior to the effective time of, and contingent
upon, the Merger.
Additionally, pursuant to the previously announced Merger Agreement, as amended
by Amendment No. 1, UTC and Raytheon agreed that, upon the completion of the
Merger, the size of the UTC Board would be increased by two to a total of 15
directors, and, on March 11, 2020, the UTC Board appointed Messrs. Thomas A.
Kennedy, George R. Oliver, Dinesh C. Paliwal, James A. Winnefeld, Jr. and Robert
O. Work and Mmes. Tracy A. Atkinson and Ellen M. Pawlikowski (collectively, the
"New Raytheon Directors"), each of whom is currently a member of the Raytheon
Board, to fill the vacancies created by this increase, the departure of the four
above-mentioned directors to Otis and Carrier, and the resignations of Mrs.
Kullman and Ms. Bryant, in each case effective as of immediately prior to the
effective time of, and contingent upon, completion of the Merger. Further, as
described above, the UTC Board appointed Mr. Ortberg (collectively, with the New
Raytheon Directors, the "New Directors") to fill a vacancy resulting from the
above-mentioned resignations and to serve on the UTC Board effective as of
immediately prior to the effective time of, and contingent upon, the Merger.
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The UTC Board has determined that each of Messrs. Oliver, Paliwal, Winnefeld,
Jr. and Work and Mmes. Atkinson and Pawlikowski qualify as an "independent
director" under the listing standards of the NYSE, the applicable rules of the
SEC and the Company's Director Independence Policy. Following the Merger, each
of the seven New Raytheon Directors will be members of the UTC Board until the
2021 Annual Meeting of the Company (subject to his or her earlier resignation,
removal or death) or (if not elected at that meeting) until his or her successor
has been duly elected and qualified.
The New Raytheon Directors, other than Mr. Kennedy, will participate in the
compensation program for non-employee directors as described in Exhibits 10.8,
10.9 and 10.10 to UTC's Annual Report on Form 10-K (Commission file number
1-812) for the fiscal year ended December 31, 2019 and in Exhibit 10.1 to UTC's
Current Report on Form 8-K dated May 3, 2018. In connection with the Merger, the
New Raytheon Directors will also receive certain payments and benefits pursuant
to the terms of the Merger Agreement and their existing arrangements with
Raytheon, and, in the case of Mr. Kennedy, his employment agreement with UTC,
which are disclosed in the section of UTC's Registration Statement on Form S-4
(No. 333-232696) filed with the SEC on July 17, 2019, as amended, entitled
"Interests of Raytheon's Directors and Executive Officers in the Merger."
Mr. Kennedy's daughter, Kelly Kennedy, is an employee of Collins Aerospace, a
wholly-owned subsidiary of UTC. Ms. Kennedy was hired in January 2019, and in
2019, she received approximately $156,000 in total compensation, consisting of
her salary and participation in employee benefit plans and programs generally
made available to employees of similar responsibility levels. Other than as
described in this Current Report on Form 8-K, there are no transactions to which
UTC was or is a participant and in which the New Directors or any of their
immediate family members has or will have any interest, that are required to be
disclosed under Item 404(a) of Regulation S-K.
Item 8.01 Other Events.
On March 11, 2020, the UTC Board approved the completion of the Separation by
means of pro rata distributions (the "Distributions") by UTC of all of the
outstanding common stock of each of Otis and Carrier, each of which is expected
to be effective at 12:01 a.m. Eastern Time on April 3, 2020, to UTC shareowners
of record as of the close of business on March 19, 2020 (the "Record Date").
In the Distributions, each UTC shareowner will receive one share of Otis common
stock for every two shares of UTC common stock, and one share of Carrier common
stock for each share of UTC common stock, in each case held as of 5:00 p.m. EDT
on the Record Date. Shareowners will receive cash in lieu of fractional shares
of each of Otis common stock and Carrier common stock. UTC shareowners will
retain their shares of UTC common stock.
The Separation and each Distribution are subject to the satisfaction or waiver
of certain conditions, as more fully described in Otis' Registration Statement
on Form 10 (File No. 001-39221), as amended, and Carrier's Registration
Statement on Form 10 (File No. 001-39220), as amended, as applicable. The press
release announcing certain details of the Separation and the Distributions is
filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated
herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
2.1 Amendment No. 1, dated March 9, 2020, to the Agreement and Plan of
Merger, dated as of June 9, 2019, by and among by and among United
Technologies Corporation, Light Merger Sub Corp. and Raytheon
Company
Press Release issued by United Technologies Corporation on March 11,
99.1 2020
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Cautionary Statement Regarding Forward-Looking Statements
This press release contains statements which, to the extent they are not
statements of historical or present fact, constitute "forward-looking
statements" under the securities laws. From time to time, oral or written
forward-looking statements may also be included in other information released to
the public. These forward-looking statements are intended to provide
management's current expectations or plans for our future operating and
financial performance, based on assumptions currently believed to be valid.
Forward-looking statements can be identified by the use of words such as
"believe," "expect," "expectations," "plans," "strategy," "prospects,"
"estimate," "project," "target," "anticipate," "will," "should," "see,"
"guidance," "outlook," "confident," "on track" and other words of similar
meaning. Forward-looking statements may include, among other things, statements
relating to future sales, earnings, cash flow, results of operations, uses of
cash, share repurchases, tax rates, R&D spend, other measures of financial
performance, potential future plans, strategies or transactions, credit ratings
and net indebtedness, other anticipated benefits of the Rockwell Collins
acquisition, the proposed merger with Raytheon or the spin-offs by UTC of Otis
and Carrier into separate independent companies (the "separation transactions"),
including estimated synergies and customer cost savings resulting from the
proposed merger with Raytheon, the expected timing of completion of the proposed
merger and the separation transactions, estimated costs associated with such
transactions and other statements that are not historical facts. All
forward-looking statements involve risks, uncertainties and other factors that
may cause actual results to differ materially from those expressed or implied in
the forward-looking statements. For those statements, we claim the protection of
the safe harbor for forward-looking statements contained in the U.S. Private
Securities Litigation Reform Act of 1995. Such risks, uncertainties and other
factors include, without limitation: (1) the effect of economic conditions in
the industries and markets in which UTC and Raytheon operate in the U.S. and
globally and any changes therein, including financial market conditions,
fluctuations in commodity prices, interest rates and foreign currency exchange
rates, levels of end market demand in construction and in both the commercial
and defense segments of the aerospace industry, levels of air travel, financial
condition of commercial airlines, the impact of weather conditions, pandemic
health issues and natural disasters and the financial condition of our customers
and suppliers, and the risks associated with U.S. government sales (including
changes or shifts in defense spending due to budgetary constraints, spending
cuts resulting from sequestration, a government shutdown, or otherwise, and
uncertain funding of programs); (2) challenges in the development, production,
delivery, support, performance and realization of the anticipated benefits
(including our expected returns under customer contracts) of advanced
technologies and new products and services; (3) the scope, nature, impact or
timing of the proposed merger with Raytheon and the separation transactions and
other merger, acquisition and divestiture activity, including among other things
the integration of or with other businesses and realization of synergies and
opportunities for growth and innovation and incurrence of related costs and
expenses; (4) future levels of indebtedness, including any indebtedness incurred
in connection with the proposed merger with Raytheon and the separation
transactions, and capital spending and research and development spending; (5)
future availability of credit and factors that may affect such availability,
including credit market conditions and our capital structure; (6) the timing and
scope of future repurchases by the combined company of its common stock, which
may be suspended at any time due to various factors, including market conditions
and the level of other investing activities and uses of cash; (7) delays and
disruption in delivery of materials and services from suppliers; (8) company and
customer-directed cost reduction efforts and restructuring costs and savings and
other consequences thereof (including the potential termination of U.S.
government contracts and performance under undefinitized contract awards and the
potential inability to recover termination costs); (9) new business and
investment opportunities; (10) the ability to realize the intended benefits of
organizational changes; (11) the anticipated benefits of diversification and
balance of operations across product lines, regions and industries; (12) the
outcome of legal proceedings, investigations and other contingencies; (13)
pension plan assumptions and future contributions; (14) the impact of the
negotiation of collective bargaining agreements and labor disputes; (15) the
effect of changes in political conditions in the U.S. and other countries in
which UTC, Raytheon and the businesses of each operate, including the effect of
changes in U.S. trade policies or the U.K.'s withdrawal from the European Union,
on general market conditions, global trade policies and currency exchange rates
in the near term and beyond; (16) the effect of changes in tax (including U.S.
tax reform enacted on December 22, 2017, which is commonly referred to as the
Tax Cuts and Jobs Act of 2017), environmental, regulatory and other laws and
regulations (including, among other things, export and import requirements such
as the International Traffic in Arms Regulations and the Export Administration
Regulations, anti-bribery and anti-corruption requirements, including the
Foreign Corrupt Practices Act, industrial cooperation agreement obligations, and
procurement and other regulations) in the U.S. and other countries in which UTC,
Raytheon and the businesses of each operate; (17) negative effects of the
announcement or pendency of the proposed merger or the separation transactions
on the market price of UTC's and/or Raytheon's respective common stock and/or on
their respective financial performance; (18) the ability of the parties to
receive the required regulatory approvals for the proposed merger (and the risk
that such approvals may result in the imposition of conditions that could
adversely affect the combined company or the expected benefits of the
transaction) and to satisfy the other conditions to the closing of the merger on
a timely basis or at all; (19) the occurrence of events that may give rise to a
right of UTC or Raytheon or both to terminate the merger agreement; (20) risks
relating to the value of the UTC shares to be issued in the proposed merger with
Raytheon, significant transaction costs and/or unknown liabilities; (21) the
possibility that the anticipated benefits from the proposed merger with Raytheon
cannot be realized in full or at all or may take longer to realize than
expected, including risks associated with third party contracts containing
consent and/or other provisions that may be triggered by the proposed
transaction; (22) risks associated with transaction-related litigation; (23) the
possibility that costs or difficulties related to the integration of UTC's and
Raytheon's operations will be greater than expected; (24) risks relating to
completed merger, acquisition and divestiture activity, including UTC's
integration of Rockwell Collins, including the risk that the integration may be
more difficult, time-consuming or costly than expected or may not result in the
achievement of estimated synergies within the contemplated time frame or at all;
(25) the ability of each of UTC, Raytheon and the companies resulting from the
separation transactions and the combined company to retain and hire key
personnel; (26) the expected benefits and timing of the separation transactions,
and the risk that conditions to the separation transactions will not be
satisfied and/or that the separation transactions will not be completed within
the expected time frame, on the expected terms or at all; (27) the intended
qualification of (i) the merger as a tax-free reorganization and (ii) the
separation transactions as tax-free to UTC and UTC's shareowners, in each case,
for U.S. federal income tax purposes; (28) the possibility that any opinions,
consents, approvals or rulings required in connection with the separation
transactions will not be received or obtained within the expected time frame, on
the expected terms or at all; (29) any financing transactions undertaken in
connection with the proposed merger with Raytheon and the separation
transactions and risks associated with additional indebtedness; (30) the risk
that dissynergy costs, costs of restructuring transactions and other costs
incurred in connection with the separation transactions will exceed UTC's
estimates; and (31) the impact of the proposed merger and the separation
transactions on the respective businesses of UTC and Raytheon and the risk that
the separation transactions may be more difficult, time-consuming or costly than
expected, including the impact on UTC's resources, systems, procedures and
controls, diversion of its management's attention and the impact on
relationships with customers, suppliers, employees and other business
counterparties. There can be no assurance that the proposed merger, the
separation transactions or any other transaction described above will in fact be
consummated in the manner described or at all. For additional information on
identifying factors that may cause actual results to vary materially from those
stated in forward-looking statements, see the joint proxy statement/prospectus
(defined below) and the reports of UTC and Raytheon on Forms 10-K, 10-Q and 8-K
filed with or furnished to the Securities and Exchange Commission (the "SEC")
from time to time. Any forward-looking statement speaks only as of the date on
which it is made, and UTC assumes no obligation to update or revise such
statement, whether as a result of new information, future events or otherwise,
except as required by applicable law.
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Additional Information and Where to Find It
In connection with the proposed merger, on September 4, 2019, UTC filed with the
SEC an amendment to the registration statement on Form S-4 originally filed on
July 17, 2019, which includes a joint proxy statement of UTC and Raytheon that
also constitutes a prospectus of UTC (the "joint proxy statement/prospectus").
The registration statement was declared effective by the SEC on September 9,
2019, and UTC and Raytheon commenced mailing the joint proxy
statement/prospectus to shareowners of UTC and stockholders of Raytheon on or
about September 10, 2019. Each party will file other documents regarding the
proposed merger with the SEC. In addition, in connection with the separation
transactions, on February 7, 2020, Carrier Global Corporation and Otis Worldwide
Corporation publicly filed their respective registration statements on Form 10,
which had originally been confidentially submitted on August 9, 2019 and
subsequently amended, and which initial public filing was amended on March 11,
2020 (the "Form 10s"). INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
JOINT PROXY STATEMENT/PROSPECTUS AND FORM 10S AND OTHER RELEVANT DOCUMENTS FILED
OR THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY
CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders
may obtain copies of the Form 10s and the joint proxy statement/prospectus free
of charge from the SEC's website or from UTC or, with respect to the joint proxy
statement/prospectus, from Raytheon. The documents filed by UTC with the SEC may
be obtained free of charge at UTC's website at www.utc.com or at the SEC's
website at www.sec.gov. These documents may also be obtained free of charge from
UTC by requesting them by mail at UTC Corporate Secretary, 10 Farm Springs Road,
Farmington, CT 06032, by telephone at 1-860-728-7870 or by email at
corpsec@corphq.utc.com. The documents filed by Raytheon with the SEC may be
obtained free of charge at Raytheon's website at www.raytheon.com or at the
SEC's website at www.sec.gov. These documents may also be obtained free of
charge from Raytheon by requesting them by mail at Raytheon Company, Investor
Relations, 870 Winter Street, Waltham, MA 02451, by telephone at 1-781-522-5123
or by email at invest@raytheon.com.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S. Securities Act of
1933, as amended.
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