How Corporate Mergers Are Judged in the Era of Trump

During the presidency of Donald Trump, capitalism has had a nuanced presence. Unlike ordinary Republican presidents with a hands-off predisposition to corporate transactions, Trump is more involved and interested in ensuring that such transactions benefit the success of the nation, the taxpayer and the people.

Two recent examples illustrate this point:

President-Elect Trump involved himself in the $66 billion Bayer merger with Monsanto. He secured commitments from the principals to create 3,000 new U.S.-based jobs, to preserve 9,000 existing jobs in the United States and to invest $8 billion in new research and development.  

In February 2018, President Trump personally renegotiated the cost of Boeing’s new Air Force One jetliners. By renegotiating the new deal, he saved $1.4 billion in taxpayer dollars, according to the White House, and set the stage for a modernized Air Force One program. 

Clearly, Trump is in favor of companies making a profit, but price, jobs, public impact and fairness are also prime considerations for him along the way. Corporations that can only demonstrate that their transactions will maximize profits will meet unusual roadblocks. Large companies looking for publicly approved mergers therefore would do well to ensure that their proposals are as good for the American people as they are for the shareholders. 

The latest such transaction to grab public attention is the proposed merger between Raytheon and United Technologies Corporation. The creation of this new proposed company, called Raytheon Technologies, would appear to have a positive holistic impact on its customers, the taxpayer, future research and development opportunities, and the needs of the Pentagon.

First, like with all mergers, a horizontal consolidation of the companies will offer savings in administration and overhead that will be passed on to the consumer and taxpayer as well as invested in enhanced research and development. The end result will be more competitive bids for defense contracts that will benefit communities far beyond just the company’s shareholders. 

The defense marketplace will also benefit from this merger. The synergies of combining diverse product lines of the merging companies will bring a nimble and innovative approach to contracting opportunities in the defense space now and into the future.

Second, the Pentagon has sounded the alarm about innovation by our closest international “competitors” in the warfighting space. Russia and China have made quantum leaps in missile technology and ballistic armaments in recent years. These technologies threaten to surpass our own and are a direct threat to our defense structure.

The advance of research and development in the defense area is a matter of national imperative. The additional research and development opportunities afforded by this proposed merger will allow the joining of engineers, project managers and thinkers in ways that would not otherwise be possible. The Raytheon Technologies proposal is an enormous opportunity to introduce a new player that can be part of the solution to this national problem and challenge. 

All things considered, this merger will be good for competition and is in the public interest. It is not a monopolization opportunity for the purpose of maximizing shareholder profit at the expense of jobs, quality and its competitors. Instead, this merger is an innovative case of the joining of complementary companies to maximize each other’s businesses and contracts while protecting jobs, the marketplace and its own competitiveness.   

Raytheon’s current competitors appear to be in agreement. In June 2019, Lockheed Martin F-35 program manager Greg Ulmer came out saying that he had “no concern” about the proposed merger of Raytheon and United Technologies Corporation, in regards to how it would affect Lockheed’s F-35 program. Innovation and breakthroughs in the defense sector represent rising tide that will lift all boats.  

The Pentagon itself has also supported the Raytheon Technologies proposal. Ellen Lord, undersecretary for acquisitions and sustainment, recently said that “there are no major concerns that I know of right now,” giving the proposed merger a tentative stamp of approval from the Pentagon

The proposed Raytheon Technologies merger is the latest example of how the current administration has helped shape private-sector transactions to increasingly benefit the American people. It should therefore be approved. In the eyes of Trump, this merger should be scored a success because it supports the taxpayer, it is a boon to the United States and it is not a malignant force in the defense industry marketplace. Regulators should act accordingly and approve the transaction in a timely fashion so that the benefits can be realized as soon as possible.  


Michael Patrick Flanagan is a former U.S. congressman from the 5th District of Illinois and a retired captain in the United States Army.

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