L3Harris expands into rocket and missile propulsion with acquisition of Aerojet Rocketdyne – Defense Security Monitor

Less than a year after its failed merger with Lockheed Martin, Aerojet Rocketdyne has been courted by a new suitor, L3Harris Technologies, which agreed to buy the company for $4.7 billion.

In February, Lockheed terminated its $4.4 billion acquisition of Aerojet Rocketdyne after the Federal Trade Commission (FTC) filed a lawsuit seeking a preliminary injunction to block the acquisition on antitrust grounds. The FTC argued that “if completed, this deal would allow Lockheed to cut off other defense contractors from the critical components they need to manufacture competing missiles.”

Resistance from competitors also contributed to the deal’s eventual demise. The FTC said in its lawsuit that the acquisition would give Lockheed control of propulsion systems used by rivals Boeing, Northrop Grumman and Raytheon Technologies, which would stifle competition and innovation.

Initially, in December 2020, Lockheed Martin agreed to acquire Aerojet Rocketdyne Holdings as part of an effort to consolidate its supply chain. Aerojet Rocketdyne’s propulsion systems have become a key component of Lockheed Martin’s supply chain and several advanced systems in its aviation, missile, fire control and space business areas.

A takeover of L3Harris would not face those vertical integration issues, making the deal even more popular with government regulators. “This acquisition will secure the defense industrial base and our customers will have a stronger commercial supplier that can effectively address current and emerging challenges through targeted investments in advanced missile technology, hypersonics and more,” the company said. threats, and to advance scientific discovery and innovation.” In short, the deal further diversifies L3Harris into the civil space, strategic defense systems and precision munitions markets.

Aerojet Rocketdyne has emerged as an attractive takeover target, with news reports saying several bidders are vying for the business, including General Electric, Textron and private equity firm Veritas Capital.

The appeal of Aerojet Rocketdyne is its status as a major supplier of military rocket and missile propulsion systems — many of which are produced by Lockheed Martin — and were a key factor in the deal’s cancellation. Global instability is increasingly becoming the new normal, so launches and missile systems will remain heavily funded. The company plays a major role in ground-based strategic deterrence efforts as well as research into several next-generation hypersonic propulsion systems. Sales have recently risen due to demand for guided multiple launch rocket systems (GMLRS) and medium-range ballistic missiles (MRBM). Additionally, NASA awarded Aerojet Rocketdyne a $1.8 billion contract modification in May 2020 to produce an additional 18 RS-25 engines to support future deep space exploration missions. Projects like these have helped drive the company’s backlog to a record $6.8 billion, roughly three years’ worth of work at current levels. Most recently, in April 2022, United Launch Alliance (ULA) awarded Aerojet Rocketdyne its largest-ever RL10 contract to deliver 116 RL10C-X engines for its Vulcan Centaur rocket. The new engine will support ULA as it fulfills its commitment under the contract it received from Amazon to support the launch of its vast constellation of Kuiper satellites.

In 2021, Aerojet Holdings’ sales will rise 5.5% to $2.19 billion from $2.07 billion in 2020. The company posted full-year net income of $144 million, compared with $138 million in 2020. The company’s 5,000 employees operate primarily in state-of-the-art manufacturing facilities in Canoga Park, California; Camden, Arkansas; West Palm Beach and Orlando, Florida; Huntsville, Alabama; Orange, Virginia; Redmond, State; Stennis Space Center, Mississippi; Jonesboro, Tennessee; and Carlstadt, New Jersey.

The transaction is expected to close in 2023, subject to required regulatory approvals and permits and other customary closing conditions.

forecast international Defense and Aerospace Corporations, Volume I – North America Services include coverage of more than 100 major US and Canadian institutions and their subsidiaries. Each of the 39 reports includes data on recent plans, mergers and joint ventures. Notable companies covered include OEMs such as Boeing, Lockheed Martin, Raytheon Technologies, and General Dynamics. There are also Tier 1 and Tier 2 contractors such as Pratt & Whitney, Honeywell, Parker Hannifin, and Spirit AeroSystems.click Learn more here.