L3Harris Technologies and Aerojet Rocketdyne Holdings, Inc. together announced the signing of a definitive agreement for L3Harris to acquire Aerojet Rocketdyne for $58 per share, in an all-cash transaction valued at $4.7 billion, inclusive of net debt.
This marks L3Harris’ second acquisition announcement of 2022, demonstrating its continued focus on delivering critical capabilities to warfighters while strengthening the nation’s defense industrial base through increased competition.
“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 Christopher E. Kubasik, L3Harris CEO and Chair. “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.”
A proven provider of world-class propulsion systems and energetics to the DoD, NASA and other partners and allies worldwide, Aerojet Rocketdyne has a 100-year heritage of excellence delivering some of the most significant moments in space exploration and discovery, while leading the industry with investments in rocket propulsion that support America’s warfighters and enhance integrated deterrence.
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.
“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,” said Eileen P. Drake, CEO and President of Aerojet Rocketdyne.
“Joining L3Harris is a testament to the world-class organization and team we’ve built and represents a natural next phase of our evolution. As part of L3Harris, we will bring our advanced technologies together with their substantial expertise and resources to accelerate our shared purpose: enabling the defense of our nation and space exploration. This is an exciting new chapter for Aerojet Rocketdyne and our over 5,200 dedicated team members, providing them with additional opportunities, and we look forward to working closely with L3Harris to complete this transaction.”
Aerojet Rocketdyne currently generates approximately $2.3 billion in annual revenue. The company’s 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.
The cash acquisition will be funded with existing cash and the issuance of new debt. The deal is expected to close in 2023, subject to required regulatory approvals and clearances and other customary closing conditions.
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.
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.
About L3Harris Technologies
L3Harris Technologies, an agile global aerospace and defense technology innovator, delivers end-to-end solutions meeting our customers’ mission-critical needs. The company provides advanced defense and commercial technologies across space, air, land, sea and cyber domains. L3Harris has more than $17 billion in annual revenue and customers in more than 100 countries.
About Aerojet Rocketdyne
Aerojet Rocketdyne, a subsidiary of Aerojet Rocketdyne Holdings, Inc., is a world-recognized aerospace and defense leader that provides propulsion systems and energetics to the space, missile defense and strategic systems, and tactical systems areas, in support of domestic and international customers.
Sources: Press Release; Breaking Defense