The aerospace units of United Technologies - Collins Aerospace and Pratt & Whitney - are to be merged with Raytheon.

The boards have approved the all stock merger of the two companies, according to a joint statement from the two companies.

“The transaction will create a premier systems provider with advanced technologies to address rapidly growing segments within aerospace and defense,” say the two companies.

“The merger of Raytheon, a leading defense company, and United Technologies, a leading aerospace company, comprised of Collins Aerospace and Pratt & Whitney, will offer a complementary portfolio of platform-agnostic aerospace and defense technologies.”

The pair state that that the merger will improve research & development capabilities, reduce costs by over $1 billion annually, and create new revenue opportunities. The pair’s combined R&D spend is $8 billion, with over 60,000 engineers employed.

“Areas of joint advancement include, but are not limited to: hypersonics and future missile systems; directed energy weapons; intelligence, surveillance, and reconnaissance (ISR) in contested environments; cyber protection for connected aircraft; next generation connected airspace; and advanced analytics and artificial intelligence for commercial aviation,” they say.

The new company will be called Raytheon Technologies Corporation. The deal excludes United Technologies’ other two units, Otis and Carrier, which will be separated from the company in the first half of 2020.

The two companies will have combined pro forma revenues of $74 billion in 2019. The deal is expected to close in the first half of 2020.

By comparison, Lockheed Martin’s 2018 revenues were $53.8 billion, while Boeing’s were $101 billion.

“Today is an exciting and transformational day for our companies, and one that brings with it tremendous opportunity for our future success,” says Raytheon chairman and chief executive Tom Kennedy.

“Raytheon Technologies will continue a legacy of innovation with an expanded aerospace and defense portfolio supported by the world’s most dedicated workforce. With our enhanced capabilities, we will deliver value to our customers by anticipating and addressing their most complex challenges, while delivering significant value to shareowners.”

Raytheon Technologies will have four business units. Following the deal Raytheon’s four units will be merged into two units: Intelligence, Space & Airborne Systems and Integrated Defense & Missile Systems. These will join Collins Aerospace and Pratt & Whitney.

The deal is subject to regulatory approvals.