United Technologies Corporation and Raytheon Technologies are merging to create an aerospace and defense giant called Raytheon Technologies.

The newly merged company will have a strong balance sheet with about with ~$8B (pro forma) cash flow by 2021 permitting it to return cash to shareholders.

Raytheon Technologies is expected to have pro forma sales of ~$74B and pro forma operating profit of $9.3B in 2019.

The newly merged company will have merged capabilities and strengths providing the ability to develop next generation aerospace and defense technologies.

The market seems to be undervaluing the merger most likely due to regulatory and execution risk.

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