Lockheed’s Acquisition of Aerojet Rocketdyne Delayed

WASHINGTON: Lockheed Martin’s proposed $4.4 billion acquisition of Aerojet Rocketdyne is now set to take place during the first quarter of 2022, Lockheed’s chief executive announced today, dashing plans for the deal to close this year.

“The Aerojet Rocketdyne transaction continues moving through the regulatory approval process, and we now anticipate closing in the first quarter of 2022,” said Lockheed CEO James Taiclet during an earnings call with investors.

Despite the delay, Taiclet sounded a confident note that the deal would be permitted to go through.

“Our strong balance sheet provides us with the capability to close on the Aerojet Rocketdyne transaction, provide robust returns to shareholders and continue to invest in our portfolio to support our customers and drive future growth,” he said.

Although the Defense Department has not stated a position on the proposed acquisition, the deal has weathered scrutiny from regulators and members of Congress who question whether the largest US defense prime should be allowed to acquire the nation’s only remaining independent supplier of solid-fuel rocket motors.

Lockheed has maintained that, under the company’s ownership, Aerojet would continue to be a fair “merchant-supplier” to defense primes.

However, Raytheon has come out in opposition to the deal, with its CEO Greg Hayes stating that the acquisition would force the company to buy 70% of its rocket motors from its biggest rival in the missile business, according to Space News.

Federal Trade Commission Chair Lina Khan has also raised eyebrows at the deal, writing in an August letter [PDF] to Sen. Elizabeth Warren, D-Mass., that she was “skeptical that behavioral remedies alone are sufficient to prevent a vertical merger from causing harm.”

However, the acquisition also has found backers on Capitol Hill.

In August, a group of 13 lawmakers sent a letter in support of the Lockheed-Aerojet deal to Deputy Defense Secretary Kathleen Hicks. According to Reuters, the signatories expressed concerns that Northrop Grumman’s 2018 acquisition of competing solid-fuel rocket motor supplier Orbital ATK had disadvantaged Aerojet, which needs to merge with a larger company in order to secure its future.

“The only reasonable assurance we have that the American rocket propulsion manufacturing sector remains strong and has at least two well-resourced merchant suppliers for all defense and space propulsion products is to approve the merger with Lockheed,” lawmakers stated in the letter.