El Segundo-based Aerojet Rocketdyne Holdings Inc. is set to be acquired by aerospace giant Lockheed Martin Corp. in a deal worth $4.4 billion, according to Lockheed Martin.
The two companies announced the deal Dec. 20.
Aeroject Rocketdyne’s propulsion systems are already a part of the Lockheed Martin supply chain and the Bethesda, Md.-based company said the acquisition will boost Lockheed’s expertise in propulsion technology.
“This transaction enhances Lockheed Martin’s support of critical U.S. and allied security missions and retains national leadership in space and hypersonic technology,” Chief Executive James Taiclet said in a statement.
Aerojet Rocketdyne Chief Executive Eileen P. Drake said the acquisition “represents a natural next phase” for the company, and a chance to “accelerate” the two companies’ efforts in the defense and space exploration spheres.
Canaccord Genuity Group Inc. analyst Ken Herbert called the deal “highly strategic” for Lockheed Martin in a note to investors following the announcement.
Herbert said the acquisition is an attempt by Lockheed Martin “to bolster its industrial supplier base” in light of the fact that Aerojet Rocketdyne “is currently one of Lockheed’s most crucial suppliers.”
Established in 2013, Aerojet Rocketdyne formed through the merger of Aerojet and Pratt & Whitney Rocketdyne (the latter a successor firm to Canoga Park-based Rocketdyne).
Both Rocketdyne and Aerojet were once among the nation’s largest Cold War-era defense contractors, and both firms also contributed to the design and manufacture of rocket engines and launch vehicles used by NASA for its lunar landing and space shuttle programs.
Business declined across the aerospace sector in the decades leading up to the merger of the two companies, and Rocketdyne’s Canoga Park plant shut down in 2013.
Aerojet Rocketdyne’s current headquarters is located less than two miles from Lockheed Martin’s El Segundo office, close to the Los Angeles Air Force Base. Lockheed Martin, which formed in 2005 with the merger of Lockheed and Martin Marietta, also has close ties to the Los Angeles area.
For most of the 20th Century, Lockheed based its operations in Burbank, though its manufacturing facility there closed in the early 1990s.
Under the terms of the acquisition deal announced Dec. 2020, Lockheed Martin will pay $56 per share, which the company says will be reduced to $51 per share following payment of a special dividend to Aerojet Rocketdyne shareholders.
The transaction is expected to close in the second half of 2021.
