L3Harris acquiring Aerojet Rocketdyne for $4.7B

WASHINGTON — L3Harris Technologies has announced plans to acquire Aerojet Rocketdyne for $4.7 billion — a transaction that, if approved, would see the nation’s sole independent solid rocket motor manufacturer bought up by a major defense prime, albeit one currently without a major stake in the missile business.

The deal, which was announced tonight and is subject to approval by the Federal Trade Commission, is expected to close in 2023.

Aerojet is a key supplier of propulsion systems and energetics for missiles, space systems, hypersonics and other precision weapons. It is the only US-based manufacturer of certain technologies, which has caused regulators to harshly scrutinize past attempts to purchase the company — especially after its main rival, Orbital ATK, was purchased by Northrop Grumman in 2018.

In January, the FTC filed suit to block Lockheed Martin from buying Aerojet in a $4.4 billion transaction. The regulatory body’s major concern was that, because Lockheed is one of the biggest prime contractors that makes missiles and space systems, its purchase of Aerojet would give it the chance to cut out its competition. Lockheed walked away from the deal in February.

In a statement, L3Harris and Aerojet said the newly-announced deal would bolster the defense industrial base at large.

“The acquisition will ensure the defense industrial base and our customers will have a strengthened merchant supplier to effectively address both current and emerging threats – and promote scientific discovery and innovation – through targeted investment in advanced missile technologies, hypersonics and more,” the companies said in a joint statement.

L3Harris’s acquisition of Aerojet could also be a lifeline for the latter company, after a difficult year that included the breakdown of the Lockheed merger and a feud between executives over control of the company, which was settled this summer after a stockholder vote. Aerojet, which currently books approximately $2.3 billion in annual revenue, has also been recently criticized by Raytheon’s chief executive for its failure to deliver rocket motors on time, according to Defense One.

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“We’ve heard the DoD leadership loud and clear: they want high-quality, innovative and cost-effective solutions to meet both current and emerging threats, and they’re relying upon a strong, competitive industrial base to deliver those solutions,” said L3Harris CEO Chris Kubasik. “With this acquisition, we will use the combined talents of more than 50,000 employees to drive continuous process improvement, enhance business operations and elevate the performance of this crucial national asset.”

Aerojet CEO Eileen Drake hailed the transaction as “a natural next phase” of the evolution of the company.

“This agreement will accelerate innovation for national security propulsion solutions while providing a premium cash value for our shareholders and tremendous benefits for our employees, customers, partners and the communities in which we operate,” she said.