WASHINGTON—Executives and analysts expect the proposed merger of Raytheon and United Technologies—which could create a potential aerospace and defense powerhouse provider with $74 billion annual revenue—will pass antitrust muster and is already winning over investors and government customers with prospects of increased research and cost-cutting opportunities.

“We are complementary, we are not competitive,” Raytheon Chairman and CEO Tom Kennedy said June 10, the day after the companies announced their proposed stock merger to form Raytheon Technologies.

“There is nothing anticompetitive of bringing these companies together,” UTC Chairman and CEO Greg Hayes added, sitting alongside Kennedy at a CNBC interview after the two men hosted a teleconference on their announcement. The companies have just 1% overlap in sales, possibly worth $750 million. “Insignificant,” Hayes said.

“In the businesses of the overlaps, again, we’ll find good new owners for those businesses that will be competitive,” he continued. “They are just not the antitrust risk that we had with Honeywell. This is a deal that will happen as opposed to the one that ain’t going to happen.”

Hayes said the companies will not have to get Chinese approval—a key consideration in any major M&A now due to the U.S.-China trade war. President Donald Trump told CNBC in a live interview he would be concerned only if the companies had product overlap, leaving many analysts with the impression he would not oppose. However, Raytheon Technologies’ size alone—third only to OEMs Airbus and Boeing in A&D—apparently was not an issue, according to the president’s comments.

“We don’t see Trump’s CNBC comments on the deal as impactful,” Capital Alpha Partners said. “He expressed concern ‘if they have the same products.’ They don’t.”

According to a June 9 announcement, the proposed Raytheon Technologies would be created via a stock exchange deal that could close in the first half of 2020, but after United Technologies spins off its Carrier air conditioning and Otis elevator businesses. Hayes would be the combined company’s chief executive while Kennedy would be executive chairman.

Under terms of the agreement, Raytheon shareowners would receive 2.3348 shares in the Boston-based combined company for each Raytheon share. Upon completion of the merger, United Technologies shareowners would own around 57% and Raytheon shareowners the rest on a fully diluted basis. The proposal was approved by the boards of directors of both companies unanimously.

The transaction is subject to customary closing conditions, the companies said, including receipt of required regulatory approvals, the approval of Raytheon and United Technologies shareowners, as well as completion by United Technologies of the separation of Otis and Carrier, expected by March 2020. Operationally, UTC is expected to be separated by the end of the year, according to executives.

Raytheon said it plans to consolidate its four current divisions into two, to be named Intelligence, Space & Airborne Systems and Integrated Defense & Missile Systems. The two divisions would join Collins Aerospace and Pratt & Whitney to form the four divisions of Raytheon Technologies. Hayes said the Mission Systems unit inside Collins currently would go over to the new Intelligence, Space & Airborne Systems, as would Raytheon’s current Forcepoint cybersecurity joint venture.

The proposed merger caught almost every financial analyst who covers A&D off guard, but quickly won plaudits. Until now, there had been a relative dearth of high-level consolidation in the sector for several reasons, with the last big deal—UTC buying Rockwell Collins to form Collins Aerospace for $31 billion—closing last November.

But the to-be Raytheon Technologies made great business sense to many analysts, dealmakers and executives elsewhere.

“The proposed UTC-Raytheon merger looks like a good, but not transformative, fit with solid financials and modest regulatory risk,” Cowen and Co. analysts said. “Investors should like the deal for Raytheon and may be neutral to slightly positive for UTC. We think Lockheed Martin, Northrop Grumman and Boeing could trade off since it would represent creation of a stronger competitor.”

For one thing, the complementary companies together will enjoy a balance of commercial and defense exposure, while still being focused in the same general sector and able to tap into mutual technologies. “This one is smart because they are clearly different areas,” Acorn Growth Companies MD Rick Nagel told Aviation Week.