Lockheed Martin announced a $5 billion acquisition of Aerojet Rocketdyne Holdings on Dec. 20 in the company’s biggest proposed expansion since acquiring Sikorsky in 2015.
The agreement on the all-cash transaction includes a $5 per share, pre-closing special dividends to Aerojet’s shareholders, reducing the post-dividend value of the deal to $4.6 billion, Lockheed said in a news release.
The deal, pending regulatory reviews expected to be complete in the second half of 2021, combines the largest defense company with one of the few remaining, independent space and hypersonic propulsion businesses.
“This transaction enhances Lockheed Martin's support of critical U.S. and allied security missions and retains national leadership in space and hypersonic technology,” said Lockheed CEO James Taiclet.
Aerojet’s lineage traces back to General Tire & Rubber Company, which formed in Akron, Ohio in 1915. The company entered the aerospace business with the 1945 acquisition of Aerojet Engineering Corp. The parent company, which was renamed GenCorp in 1984, acquired Pratt & Whitney Rocketdyne from United Technologies in 2013. Five years ago, GenCorp. was finally renamed Aerojet Rocketdyne Holdings Inc. during the company’s centennial year.
Aerojet plays a major role in the U.S. aviation and and space business. The company is already teamed with Lockheed to provide the scramjet engine for the Hypersonic Air-breathing Weapon Concept, a demonstrator missile funded by DARPA and the Air Force Research Laboratory. Aerojet also plays a role in the Northrop Grumman Ground Based Strategic Deterrent program. NASA also plans to use Aerojet’s main engine for the Space Shuttle, the RS-25, on the Space Launch System.
Lockheed’s move completes a broader consolidation in the U.S. space propulsion business. In 2018, Northrop Grumman completed a $9.2 billion acquisition of Orbital ATK, which now forms the company’s Innovation Systems business division.
The agreement also adds another layer of industrial capability to Lockheed’s growing hypersonic business. On Nov. 25, the company also acquired Integration Innovation Inc. (I3), a software and engineering company based in Huntsville, Alabama, that specializes in hypersonic flight.
Aerojet is already a major supplier for Lockheed’s tactical weapons business. The company supplies the rocket motors for the Lockheed Terminal High Altitude Area Defense program and the Patriot Advanced Capability-3 Missile Segment Enhancement interceptor. Aerojet also is developing the throttleable rocket motor for the Lockheed Martin Operational Fires program, another DARPA-funded demonstrator for a hypersonic missile with a flexible range capability.
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