President Donald Trump on Monday said he has concerns that a merger between United Technologies and Raytheon would harm competition and make it more difficult for the U.S. government to negotiate defense contracts.
"I'm a little concerned about United Technologies and Raytheon," Trump said in an exclusive interview with CNBC. Aerospace companies have "all merged in so it's hard to negotiate" with them, he added, suggesting the defense industry could be heading in the same direction.
Asked whether he would have problems with the merger, Trump replied, "Only if they have the same products. That would be the thing that bothers me most."
United Technologies and Raytheon announced on Sunday that they had struck deal to combine, which would bring together a booming aerospace business with a giant government defense contractor. That tie-up could rattle suppliers, customers and competitors. The new company, with an estimated $74 billion in sales, would become the second-largest aerospace-and-defense company in the U.S. after Boeing.
Executives from the two companies dismissed Trump's concerns about a possible reduction in competition, saying they have very little overlap that would generally spark concern among anti-trust regulators.
"We are complementary, not competitive," Raytheon CEO Tom Kennedy told CNBC in an interview. "I don't know the last time we competed against United Technologies."
Greg Hayes, United Technologies' CEO and chairman who is slated to be CEO of the new company, once the merger closes, said he looked forward "to talking to the president later today," about potential job growth under the deal.
Still, the president repeatedly expressed concerns about dwindling competition in aerospace.
"When I hear United and I hear Raytheon, when I hear they're merging, does that make it less competitive? It's already not competitive," Trump said.
"I just want to see competition. They're two great companies, I love them both. But I want to see that we don't hurt our competition."
The proposed deal would create a giant, one-stop shop with products that range from Tomahawk missiles and radar systems to jet engines that power passenger planes and the seats that fill them.
Raytheon and United Technologies have a combined market value of close to $166 billion. The stock price of each has gained more than 21% this year, far outpacing the broader market, as they've reaped the benefits of strong defense spending and record orders for passenger planes around the world. Still, they have lagged some of their competitors.
United Technologies is in the process of spinning out its Carrier air conditioning unit and its Otis elevator business. The company expects those transactions and the newly announced deal with Raytheon to close by early 2020.