Lockheed Martin Agrees to Buy Aerojet Rocketdyne -- Update
December 20 2020 - 10:31PM
Dow Jones News
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 doug.cameron@wsj.com
(END) Dow Jones Newswires
December 20, 2020 22:16 ET (03:16 GMT)
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