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Lockheed Martin to buy Aerojet Rocketdyne for USD4.4 billion

Lockheed Martin has agreed to acquire rocket engine maker Aerojet Rocketdyne for USD4.4 billion, as the world’s largest defence contractor indicated it expects its work developing and manufacturing hypersonic weapons, missile defences, and space systems to benefit from moving a propulsion provider in-house.

Aerojet Rocketdyne is based in Los Angeles County, California. (Aerojet Rocketdyne)

Aerojet Rocketdyne is based in Los Angeles County, California. (Aerojet Rocketdyne)

“Bringing the propulsion systems more closely integrated into the overall contract and the overall design of our missile and rocket products will be a value to customers from an efficiency perspective, tighter engineering integration, better production planning, etcetera,” said James Taiclet, Lockheed Martin’s president and CEO. “The resources we can bring to bear on a technical problem or an integration of systems is pretty dramatic when you put the two companies together.”

The two US-based companies, which announced the proposed transaction late on 20 December, aim to close the deal in the second half of 2021. Lockheed Martin plans to pay for the acquisition with a mix of cash on hand and debt.

Lockheed Martin said it will form a transition team “to allow for a seamless integration and ensure continuity for customers, employees, and other stakeholders”.

To address potential regulatory concerns, Aerojet Rocketdyne will continue to sell its products to other prime contractors, Taiclet told analysts. He compared the acquisition with rival Northrop Grumman’s USD9.2 billion purchase of propulsion provider Orbital ATK in 2018, which authorities approved with the caveat that Orbital ATK’s products remain available to the rest of industry.

With Lockheed Martin currently providing radars and other components to competitors, it has “already created a reputation of being a fair player and an effective supplier to other defence primes”, Taiclet asserted.

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