Defense firm L3Harris to buy Aerojet for $4.7 bln with eye on missile demand (updated)

Aerojet Rocketdyne Holdings

19/12/2022 18:21

(Adds details on new segment, shares)
       Dec 19 (Reuters) - U.S. defense contractor L3Harris
Technologies Inc  LHX.N  said on Sunday it would buy Aerojet
Rocketdyne Holdings Inc  AJRD.N  for $4.7 billion in cash as it
looks to tap into rising demand for missiles amid the Ukraine
conflict.
    Reuters first reported on Saturday that L3Harris was nearing
the deal to acquire Aerojet.
    The offer price of $58 per share represents a premium of
5.7% to Aerojet's close on Friday.
    The deal, expected to be completed in 2023, would create a
new segment within L3Harris that would report directly to the
company's chief executive.
    Shares of L3Harris were down 3.8% in afternoon trade on
Monday, while those of Aerojet were up 1.5%.
    Reuters reported last month that L3Harris, formed by the
merger of L3 Technologies and Harris Corp in 2019, was among the
companies vying to buy Aerojet, which put itself up for sale
after antitrust regulators blocked a merger with Lockheed Martin
Corp  LMT.N  earlier this year.
    The United States has assisted Ukraine with billions of
dollars in military aid, including missiles and air defense
systems, driving up demand for missiles as allies also seek to
boost their defenses.
    Aerojet develops and manufactures liquid and solid rocket
propulsion and hypersonic engines for space, defense, civil and
commercial applications.
    The market for rockets has also received a leg up from the
National Aeronautics and Space Administration (NASA), one of
Aerojet's main customers, which is pursuing moon and deep space
missions with renewed vigor.
    Aerojet makes the RS-25 engines for NASA's launch vehicle,
as well as the RL10 engines that power launch vehicles made by
United Launch Alliance, a joint venture between Boeing Co  BA.N 
and Lockheed Martin.
    L3Harris, which has been investing in the space and cyber
industries, is looking to solidify its position among top
aerospace and defense firms as one of the leading contractors to
the Pentagon.
 (Reporting by Nathan Gomes and Kanjyik Ghosh in Bengaluru;
Editing by Rashmi Aich and Shounak Dasgupta)
 ((Nathan.Gomes@thomsonreuters.com))