Aerojet Rocketdyne to be Acquired by Lockheed Martin

Lockheed used to be in the propulsion business e.g. SRAM.

Absorbing essential propulsion stack vendors into individual primes still makes me queasy.
 
Moose said:
marauder2048 said:
Lockheed used to be in the propulsion business e.g. SRAM.

Absorbing essential propulsion stack vendors into individual primes still makes me queasy.
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It should, LM's size is problematic even before this.
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In my view, that's much less of an issue than the loss of an innovative, independent propulsion focused company.

The benefits from a cross-pollination of ideas by virtue of having easy interactions with multiple customers
with different technical approaches who weren't concerned that you were also a competitor can't be overstated.
 
The WSJ had a write-up on the proposed acquisition with a link to a very recent (2018) Stanford Institute For
Economic Policy Research paper on defense consolidation and its impact on acquisition costs.

The authors' methodology shows the impact to be non-existent: "impacts on acquisition costs are statistically indistinguishable from 0."
 

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marauder2048 said:
Lockheed used to be in the propulsion business e.g. SRAM.

Absorbing essential propulsion stack vendors into individual primes still makes me queasy.
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Yep. Where's that going to leave Boeing and Raytheon? I'd guess Boeing's reason for no-bidding GBSD will apply to every other missile program that requires a booster for both Boeing and Raytheon.
 
I have the same concerns about mergers like this. It's not even the specifics of who is getting what and why, just that competition (usually) breeds innovation and has a knock-on effect in terms of keeping companies honest (again, usually). Even the Soviets had an understanding of this by having different competitive design bureaus.
 
Well, competing is nice. But with a descent budget it's better. And it's not like Space stuffs and Hypersonic come for cheap.
 
You know, at some point the US government decided "Ma Bell" was to big and ordered it's breakup. Of course that was the 20th Century.
 
So space is becoming more like flying, considering how many aircraft manufacturers were there during the cold war.
 
Maro.Kyo said:
So space is becoming more like flying, considering how many aircraft manufacturers were there during the cold war.
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During the height of the Cold War upwards of 10% of GDP was allocated to defense spending that would equate to ~$2.2 Trillion today. You could support a lot more contractors at that level of spending.

post script - no I’m not advocating for this level of spending or making any inflation adjusted, we’re not in the Cold War argument.
 
jsport said:
www.defensenews.com

Where is defense M&A policy headed? Here’s some advice for the new administration.

Depending on who is doing the talking, the ongoing review of Lockheed Martin’s proposed purchase of Aerojet Rocketdyne is either critical for strengthening or catastrophic to the health of the defense-industrial base.
www.defensenews.com www.defensenews.com
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Meant to post this a few days ago:
www.reuters.com

Senator Warren questions Lockheed's antitrust solution to buy Aerojet

U.S. Senator Elizabeth Warren has asked the Federal Trade Commission to take a tougher look at defense industry mergers, questioning a proposal from Lockheed Martin that would allow it to buy the biggest independent maker of rocket motors, Aerojet Rocketdyne Holdings.
www.reuters.com www.reuters.com
 
The FTC is going to block the deal.

Federal Trade Commission blocks Lockheed Martin’s acquisition of Aerojet Rocketdyne

Lockheed Martin’s proposed $4.4 billion acquisition of rocket engine manufacturer Aerojet Rocketdyne has been blocked by the Federal Trade Commission, the agency announced Jan. 25.

Lockheed Martin in December 2020 announced its intent to acquire Aerojet Rocketdyne, the last independent U.S. supplier of missile propulsion systems. The FTC said it will sue to block the deal, arguing that if the acquisition is allowed to proceed, “Lockheed will use its control of Aerojet to harm rival defense contractors and further consolidate multiple markets critical to national security and defense.”

Aerojet supplies power, propulsion and armament systems used in missiles made by Lockheed and other defense prime contractors.
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With Lockheed deal in doubt, Aerojet faces internal crisis

The future of Aerojet Rocketdyne appears on shaky ground, with its $4.4 billion merger with Lockheed Martin seemingly dead in the water and a public war brewing among the company’s leadership.

On Tuesday evening, Aerojet announced it had begun an internal investigation into Warren Lichtenstein, who has been the company’s executive chairman since 2016. Earlier that day, SPH Group Holdings LLC — an affiliate of Lichtenstein’s Steel Partners Holdings L.P. — filed documentation to replace four of Aerojet’s existing board members, including CEO and President Eileen Drake.

In a statement, Aerojet called Lichtenstein’s machinations a “disruptive proxy contest” driven by “personal concerns and [a] desire to secure his board position and gain leverage” as the company’s internal probe continues. Lichtenstein’s Steel Partners has rebutted those claims, saying that the new slate of directors would better position a standalone Aerojet, should the Lockheed acquisition fall though.
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And that’s the end of that.

news.lockheedmartin.com

Lockheed Martin Terminates Agreement to Acquire Aerojet Rocketdyne

Lockheed Martin Corporation (NYSE: LMT) today announced it has terminated its agreement to acquire Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD). The decision to terminate the agreement follows...
news.lockheedmartin.com news.lockheedmartin.com

BETHESDA, Md., Feb. 13, 2022 /PRNewswire/ -- Lockheed Martin Corporation (NYSE: LMT) today announced it has terminated its agreement to acquire Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD). The decision to terminate the agreement follows the U.S. Federal Trade Commission's (FTC) lawsuit filed late last month seeking a preliminary injunction to block the acquisition.

Our planned acquisition of Aerojet Rocketdyne would have benefitted the entire industry through greater efficiency, speed, and significant cost reductions for the U.S. government," said Lockheed Martin Chairman, President and CEO James Taiclet. "However, we determined that in light of the FTC's actions, terminating the transaction is in the best interest of our stakeholders. We stand by our long heritage as a merchant supplier and trusted partner and will continue to support Aerojet Rocketdyne and other essential suppliers in the Defense Industrial Base still overcoming the challenges of the pandemic.

Moving forward, we will maintain our focus on the most effective use of capital with the highest return on investment, including our ongoing commitment to return value to shareholders. We remain confident in our company's strong foundation and growth potential as several exciting projects enter production.

Finally, I'm proud of the 114,000 patriotic men and women of Lockheed Martin. They have a principled commitment to deliver the highest quality and most effective solutions to our customers. We will continue to support the United States and its allies through our industry leadership and developing the technologies to ensure effective threat deterrence for decades to come.
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There's also the case that when the NG-OATK deal happened they still had another independent rocket motor supplier there. With this deal, a missile OEM would have absorbed the last remaining independent SRM shop. Lockheed also has a much larger (relative to Northrop Grumman) missile portfolio and competes with Raytheon across a broader range of applications. Also a different leadership at FTC and you kind of learn from past actions.

Wonder what happens to Aerojet now.
 
bring_it_on said:
There's also the case that when the NG-OATK deal happened they still had another independent rocket motor supplier there. With this deal, a missile OEM would have absorbed the last remaining independent SRM shop. Lockheed also has a much larger (relative to Northrop Grumman) missile portfolio and competes with Raytheon across a broader range of applications. Also a different leadership at FTC and you kind of learn from past actions.

Wonder what happens to Aerojet now.
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I'd suggest Leidos or General Dynamics.
 
Lc89 said:
bring_it_on said:
There's also the case that when the NG-OATK deal happened they still had another independent rocket motor supplier there. With this deal, a missile OEM would have absorbed the last remaining independent SRM shop. Lockheed also has a much larger (relative to Northrop Grumman) missile portfolio and competes with Raytheon across a broader range of applications. Also a different leadership at FTC and you kind of learn from past actions.

Wonder what happens to Aerojet now.
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I'd suggest Leidos or General Dynamics.
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Blue Origin?
 
Sierra Nevada would be an interesting merger target but I'd rather they stand on their own.
 
L3Harris makes an interesting choice, they are not airframers but airframe modifiers and outfitters. This could make for interesting teamings down the road.
 

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