June 30, 2022

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Lockheed cancels $4.4 billion deal to buy Aerojet aircraft amid regulatory hurdles

Lockheed cancels $4.4 billion deal to buy Aerojet aircraft amid regulatory hurdles

Feb 13 (Reuters) – US arms maker Lockheed Martin (LMT.N) It canceled plans on Sunday to acquire Aerojet Rocketdyne Holdings Inc., a maker of rocket engines (AJRD.N) for $4.4 billion amid opposition from US antitrust enforcement.

Federal Trade Commission File a lawsuit to prevent The deal was signed in late January on the grounds that it would allow Lockheed to use its control of the Aerojet to harm other defense contractors. Rocket maker Raytheon Technologies (RTX.N) He was an outspoken opponent of the proposed acquisition.

merger that was announce In late 2020, he drew criticism that it would give Lockheed a dominant position in solid-fuel rocket engines – a vital part of the US missile industry.

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Lockheed CEO James Ticklet said the acquisition would have improved efficiency, speed and reduced costs for the US government, but that termination of the agreement was in the interests of stakeholders.

Aerojet, which reports fourth-quarter earnings later this week, said in a separate statement that it still expects “strong future performance” despite the canceled merger.

The business merger agreement does not include a termination fee if antitrust regulators oppose the deal, according to a regulatory filing. A Lockheed spokesperson previously said the company had no plans to make any such payments to Aerojet.

If the deal did end up in court, it would have been the first defense merger challenge in decades, according to the Federal Trade Commission.

Other critics of the deal include US Democratic Senator Elizabeth Warren, Who is theIt asked the Federal Trade Commission to examine internal firewalls, and Lockheed said it would put them in place to prevent it from gaining a competitive advantage over its peers.

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Lockheed said it represented 33% of Aerojet sales and argued that the deal would reduce costs for the Pentagon and US taxpayers.

Rocket engines such as those made by Aerojet are used in everything from an internal defense missile system to Stinger missiles.

Aerojet develops and manufactures liquid and solid rocket propulsion, air-breathing hypersonic engines, electric power and propulsion for aerospace, defense, civil and commercial applications. Its clients include the Pentagon, NASA and Boeing (ban)Lockheed Martin, Raytheon, and United Launch Alliance.

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Additional reporting by Anirudh Saligrama in Bengaluru and Diane Bartz and Mike Stone in Washington, DC; Editing by Diane Kraft and Jacqueline Wong

Our criteria: Thomson Reuters Trust Principles.