Lockheed Martin has struck a deal to acquire Aerojet Rocketdyne Holdings in an all-cash transaction valued at $4.4 billion, the two companies announced today.
The agreement marks the latest combination of space industry heavyweights, following Northrop Grumman’s $7.8 billion acquisition of Orbital ATK in 2017.
It also marks a change of ownership for Aerojet Rocketdyne’s space propulsion facility in Redmond, Wash., one of the Seattle area’s oldest space ventures.
The Redmond facility began operation in 1968 as Rocket Research, and was acquired by Aerojet in 2002. It has built thruster systems for virtually every interplanetary mission since the Apollo era.
Aerojet Rocketdyne’s Redmond team, which numbers more than 400 employees, is currently working on propulsion systems for the Orion deep-space capsule that Lockheed Martin is building for NASA’s use. Other types of built-in-Redmond thrusters are on their way to Mars for NASA’s Perseverance rover mission — a mission in which Lockheed Martin is also playing a part.
In all, Aerojet Rocketdyne operates 14 rocket development facilities that span the nation, from New Jersey and Florida to California, where the company is based.
.@AerojetRdyne is joining @LockheedMartin! This transaction will take us to the next level and accelerate our shared purpose: enabling the defense of our nation and space exploration. Read more here: https://t.co/tAgQXDsi3n https://t.co/SLgHXZtrwh pic.twitter.com/sy2cc3d8DZ
— Aerojet Rocketdyne (@AerojetRdyne) December 20, 2020
The complex deal calls for Lockheed Martin to acquire Aerojet Rocketdyne for $56 a share in cash, adjusted to $51 per share after the payment of a special pre-closing dividend of $5 per share. Lockheed Martin said the total transaction value would be $4.4 billion, including the assumption of net cash.
Aerojet Rocketdyne said the payout represents a roughly 33% premium over the company’s closing stock price on Friday.
“We are pleased to bring together our complementary companies in a transformative transaction that will provide premium cash value for our shareholders and tremendous benefits for our employees, customers and partners,” Eileen Drake, Aerojet Rocketdyne’s CEO and president, said in a news release.
Lockheed Martin’s space division has its hand in programs ranging from Orion and Mars missions to its collaboration with Jeff Bezos’ Blue Origin space venture on a proposed lunar lander, its work on national security satellites and its half-interest (with Boeing) in United Launch Alliance.
“Acquiring Aerojet Rocketdyne will preserve and strengthen an essential component of the domestic defense industrial base and reduce costs for our customers and the American taxpayer,” James Taiclet, Lockheed Martin’s president and CEO, said in a news release.
The two companies said the transaction is expected to close in the second half of 2021, subject to the satisfaction of customary closing conditions, including approvals from regulators and from Aerojet Rocketdyne’s stockholders. A transition team will be formed to manage the integration of operations.
