United Technologies Corp., a U.S. aircraft manufacturing company, plans to merge its aerospace unit with Raytheon Co., a defense contractor.

The deal will create a new company that spans commercial aviation and defense sourcing, valued at approximately $121 billion. The merger is expected to result in over $1 billion in cost synergies by the end of the fourth year.

Under the pact, United Technologies shareholders will own about 57 percent of the combined company, called Raytheon Technologies Corp., whereas Raytheon shareholders will own the remaining stake.

The move will close in the first half of 2020. United Technologies and Raytheon have market capitalizations of $114 billion and $52 billion, respectively.