The deal comes exactly two years after Lockheed Martin attempted to buy Aerojet in a $4.4 billion bid
WASHINGTON — L3Harris Technologies on Dec. 18 announced an agreement to acquire Aerojet Rocketdyne for $4.7 billion.
The deal comes exactly two years after Lockheed Martin attempted to buy Aerojet in a $4.4 billion deal blocked by antitrust authorities earlier this year.
L3Harris acquires Aerojet in an all cash transaction for $58 per share. Aerojet shares traded at $54.89 on December 16th. The transaction is expected to close in 2023, subject to regulatory approvals.
Based in Sacramento, California, Aerojet Rocketdyne manufactures rocket engines and propulsion systems for spacecraft, ballistic missiles and military tactical weapons. The company generates annual sales of approximately $2.3 billion.
Headquartered in Melbourne, Florida, L3Harris is a $17 billion global defense and aerospace company.
The acquisition of Aerojet would give L3Harris a larger presence in civilian space, strategic defense systems and precision munitions.
“With this acquisition, we will leverage the combined talents of more than 50,000 employees to drive continuous process improvements, improve business operations and enhance the performance of this crucial national asset,” said Christopher Kubasik, CEO of L3Harris, in a statement.
Eileen Drake, CEO of Aerojet, said the sale of the company to L3Harris will “accelerate innovation for national security propulsion solutions while delivering best-in-class cash value for our shareholders and tremendous benefits for our employees, customers, partners and the communities in which we operate.” , Offer.”
According to media reports, there were several buyers interested in acquiring Aerojet, including General Electric, Textron and private equity firms.
As the last remaining independent US supplier of tactical missile propulsion systems, Aerojet has been at the center of a contentious battle to consolidate aerospace and defense companies over the past two years. The Pentagon has never publicly disclosed its views on Lockheed’s attempt to buy Aerojet, but made clear in a report that it would question vertical integration of defense suppliers.
Aerojet executives and some lawmakers have argued that the company needs more financial resources to invest in next-generation technologies and would be better off as part of a larger defense contractor than as an independent company.
‘Stronger Trade Supplier’
The Federal Trade Commission blocked Lockheed’s bid in February, arguing that the deal would give Lockheed — a major supplier of tactical missiles — an opportunity “to cut off other defense contractors from the critical components they need to build competing missiles.”
L3Harris said Dec. 18 the acquisition will “ensure the defense industrial base and our customers have a strengthened commercial supplier to effectively address both current and emerging threats — and foster scientific discovery and innovation — through targeted investments in advanced missile technologies, hypersonic and more.”
Aerojet and L3Harris would combine complementary programs and are unlikely to raise the vertical integration concerns that scuppered the deal with Lockheed Martin, industry analyst Byron Callan of Capital Alpha Partners wrote in a research note last month. L3Harris has no “significant market position in solid rocket motors or satellite maneuvering systems”.
The acquisition of Aerojet would support L3Harris’ expansion in the defense and space sectors following the merger of L3 Technologies and Harris Corp. continue in 2019. The company acquired Viasat’s tactical data connectivity business in October for $1.96 billion.
If the deal goes through, it would bring certainty to Aerojet after two years of turmoil.
The CEO of Raytheon, one of Aerojet’s main customers, complained in a recent interview with Defense One that the quality of Aerojet’s rocket engines and projected performance had declined due to sales distractions.
On the NASA side, Aerojet reported delays in the production of RS-25 engines for the Artemis lunar program. The company received a $1.79 billion contract from NASA in 2020 to manufacture a new consumable version of the Space Launch System engine to replace the current supply of space shuttle-era refurbished RS-25 engines .