Lockheed raises concerns over L3Harris-Aerojet deal

Aerojet Rocketdyne Holdings

20/06/2023 17:58

(Adds L3Harris, FTC and Aerojet comments in 6th, 7th
paragraphs)
    By Valerie Insinna
       PARIS, June 20 (Reuters) - Lockheed Martin  LMT.N  has
raised concerns with the U.S. Defense Department and Federal
Trade Commission (FTC) about L3Harris's  LHX.N  acquisition of
Aerojet Rocketdyne  AJRD.N , Lockheed's chief operating officer
said on Tuesday. 
    Frank St John told Reuters that Lockheed, Aerojet's biggest
customer, wanted L3Harris to ensure access to rocket motors,
fair pricing and IP protections, adding that it had received
"little response" from L3Harris over its concerns. 
    "To date, we've been unable to gain a commitment from
L3Harris for those provisions as a merchant supplier," St John
said in an interview at the Paris Airshow. 
    "This is really concerning to us because they are going to
be vital to meeting the increasing demand that we're seeing on
multiple weapons systems," such as the Javelin missile launcher
and Patriot air defense system.
    If L3Harris continues to be unresponsive, Lockheed wants the
Defense Department or FTC to put in place a mechanism to
guarantee access to technology, St John said.
    A spokesperson for L3Harris did not comment on the concerns
raised by Lockheed directly but said: "We are in an FTC process
and expect the transaction to close the second half of 2023."
    The FTC declined to comment, Aerojet Rocketdyne referred
requests for comment to L3Harris and Defense Department did not
immediately respond to emailed requests for comment.
    L3Harris said in December it would buy Aerojet for $4.7
billion in cash as it looks to tap into rising demand for
missiles because of the Ukraine conflict.
    Lockheed previously attempted to buy Aerojet in a $4.4
billion deal, but walked away from the acquisition in February
2022 after the FTC sued to block the deal, citing concerns that
Lockheed could hinder competitors' fair access to Aerojet
products.
    RTX  RTX.N  executives, who opposed Lockheed's failed bid
for Aerojet, have signalled they would not do the same in
L3Harris' case, with RTX CEO Greg Hayes saying that L3Harris is
not a competitor in the missile business in an interview with
trade publication Defense One.
    RTX Chief Operating Officer Chris Calio told Reuters in an
interview on Monday that "any transaction that can bring
investment, capability and capacity would be helpful. I don't
think status quo is an option." 

 (Reporting by Valerie Insinna
Editing by Mark Potter and Barbara Lewis)