L3Harris nears $4.7 bln deal to acquire Aerojet Rocketdyne-sources

Aerojet Rocketdyne Holdings

17/12/2022 21:52

(Adds background on the companies)
    By David  Carnevali and Mike Stone
       Dec 17 (Reuters) - L3Harris Technologies Inc  LHX.N  is
nearing a $4.7 billion deal to acquire U.S. rocket maker Aerojet
Rocketdyne Holdings Inc  AJRD.N , 10 months after the latter's
$4.4 billion sale to Lockheed Martin Corp  LMT.N  fell through,
people familiar with the matter said on Saturday. 
    Lockheed Martin walked away from its deal with Aerojet in
February after antitrust regulators sued to block it, arguing
that allowing the El Segundo, California-based company to be
taken over by its biggest customer would have severely
disadvantaged Lockheed Martin's rivals.
    L3Harris is a defense contractor that is mostly a competitor
rather than a customer of Aerojet. Aerojet's solid fuel rocket
motors and other propulsion systems would help L3Harris expand
its space defense systems and precision munitions businesses.   
    L3Harris outbid General Electric Co  GE.N  in the final
stages of a sale process for Aerojet with a $58-per-share offer,
one of the sources said. An agreement could be announced as
early as Monday, the sources added. 
    The sources requested anonymity because the matter is
confidential. Spokespeople for Aerojet, L3Harris and General
Electric did not immediately respond to requests for comment.
    The deal represents a 28% premium to Aerojet's share price
on Oct. 24., the last trading day before Reuters reported that
the company was exploring a sale.
        Aerojet is the biggest maker of propulsion systems in
the U.S. defense industry left as an independent company after
Northrop Grumman Corp  NOC.N  acquired Orbital ATK Inc in 2018
for $9.2 billion.
  
        The company develops and manufactures liquid and solid
fuel  rocket motors and hypersonic engines for space, defense,
civil and commercial applications. Its customers include the
Pentagon, Boeing  BA.N , Lockheed Martin and Raytheon
Technologies Corp  RTX.N .
  
        L3Harris is itself the product of industry
consolidation, created in 2019 through the merger of L3
Technologies and Harris Corp, which were looking for scale as
they sought to 
    become bigger
     Pentagon suppliers. The company has since been growing
through acquisitions, most recently with a deal in October to
buy Viasat Inc's  VSAT.O  tactical data business for $1.96
billion.
  
        Jefferies analysts wrote in a note earlier this month
after 
    Reuters reported
     that L3 Harris was one of the bidders vying for Aerojet
that the latter offered complementary programs across key growth
areas that would account for 15% of L3Harris' sales. "Overlap is
more complementary than vertical, limiting regulatory risk," the
Jefferies analysts wrote.
  
 (Reporting by David Carnevali in New York and Mike Stone in
Washington, D.C.; Editing by Chizu Nomiyama)
 ((Greg.Roumeliotis@thomsonreuters.com; +1 646 223 6022; Reuters
Messaging: greg.roumeliotis.thomsonreuters.com@reuters.net))