*UPDATED* As previously announced, L3Harris finalized its acquisition of Aerojet Rocketdyne on July 28, following news that the Federal Trade Commission will not block the deal.
The operation is now the fourth business segment of the company, joining L3Harris’ Integrated Mission Systems, Space and Airborne Systems, and Communication Systems.
In its recent quarterly report, L3Harris CEO Chris Kubasik said that the company was “advised today that the FTC will not block our acquisition of Aerojet Rocketdyne; therefore, we are moving forward to close the transaction on or about July 28.”
L3Harris Technologies agreed to acquire Aerojet Rocketdyne in December 2022 for $58 per share in an all-cash transaction valued at $4.7 billion, inclusive of net debt. Unlike previous L3Harris acquisitions that were more complementary to the military electronics marketplace, this purchase expands the firm into the rocket and space propulsion sector.
Aerojet Rocketdyne was originally set to join Lockheed Martin under a $4.4 billion deal, but this was scuttled following an FTC lawsuit that sought a preliminary injunction to block the acquisition on antitrust grounds. The FTC argued, “If consummated, this deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles.”
The L3Harris acquisition would not face those vertical integration concerns, making the deal much more palatable to government regulators. The company said that 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.” Simply put, the deal further diversifies L3Harris into the markets for civil space, strategic defense systems, and precision munitions.
Aerojet Rocketdyne’s attractiveness is due to its position as a key supplier of military rocket and missile propulsion systems – many of which are produced by Lockheed Martin and were key factors in that deal getting canceled.
Thanks to Russia’s war in Ukraine and China’s growing belligerence over Taiwan, global instability has become the new normal, and, as such, launch and missile systems will remain strongly funded. Aerojet Rocketdyne has a key position on the Ground-Based Strategic Deterrent effort as well as work on several next-generation hypersonic propulsion systems.
Sales have been driven upward of late thanks to demand for the Guided Multiple Launch Rocket System (GMLRS) and Medium-Range Ballistic Missile (MRBM). In addition, NASA awarded Aerojet Rocketdyne a $1.8 billion contract modification in May 2020 for the production of an additional 18 RS-25 engines to support future deep space exploration missions. Programs such as these helped drive the firm’s backlog to a record $6.8 billion, roughly three years’ worth of work at current levels. More recently, in April 2022, United Launch Alliance (ULA) issued the largest RL10 contract ever awarded to Aerojet Rocketdyne to deliver 116 RL10C-X engines for its Vulcan Centaur rocket. The new engines will support ULA as it works to fulfill its commitments under a contract it received from Amazon to support the launch of its massive Kuiper satellite constellation.
Aerojet Rocketdyne’s 5,280 employees operate primarily out of advanced manufacturing facilities in Canoga Park, California; Camden, Arkansas; West Palm Beach and Orlando, Florida; Huntsville, Alabama; Orange, Virginia; Redmond, Washington; Stennis Space Center, Mississippi; Jonesborough, Tennessee; and Carlstadt, New Jersey.
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