Lockheed Martin Agrees to Buy Aerojet Rocketdyne -- Update

By Doug Cameron 

Lockheed Martin Corp. announced on Sunday plans to buy Aerojet Rocketdyne Holdings Inc., a space and missile-defense specialist, in a deal valued at around $5 billion.

The deal would add one of the largest makers of rocket motors for space and missile-launch systems, one of the Pentagon's main growth areas. The U.S. military-procurement budget is expected to remain flat over the next several years.

Lockheed Martin Chief Executive Jim Taiclet flagged plans in the summer to give priority to acquisitions, and Aerojet Rocketdyne would be the biggest since it bought Sikorsky Aircraft in 2015.

Lockheed Martin offered $56 a share for Aerojet Rocketdyne, which would fall to $51 at closing following the payment of a $5 cash dividend scheduled for March, reducing the cash cost of the deal to $4.4 billion. That is a 42% premium to the weighted-average price over the past 90 days.

The deal is expected to close in the second half of next year, subject to regulatory and shareholder approval.

El Segundo, Calif.-based Aerojet Rocketdyne employs around 5,000 employees and had revenue of almost $2 billion last year. Its order backlog approaches $7 billion and includes some of the biggest Pentagon priorities such as hypersonic missiles. It is also on two of the National Aeronautics and Space Administration's largest programs

Aerojet Rocketdyne makes rocket boosters for key missile defense systems such as Lockheed's own Terminal High Altitude Area Defense program. It also gives Lockheed access to other big Pentagon programs such as the replacement of land-based nuclear missiles led by Northrop Grumman Corp.

Northrop Grumman's acquisition of Orbital ATK Inc., another big provider of space and missile propulsion systems, had long made Aerojet Rocketdyne a potential target for Lockheed Martin or Boeing Co., partners in the United Launch Alliance space joint venture, said analysts.

Write to Doug Cameron at [e-mail]

(END) Dow Jones Newswires

December 20, 2020 22:16 ET (03:16 GMT)

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