Lockheed Martin Terminates $4.4 Billion Purchase Of Aerojet Rocketdyne
Lockheed Martin announced on Sunday that it was abandoning its plans to purchase rocket engine manufacturer Aerojet Rocketdyne, after the $4.4 billion deal met with opposition from the Federal Trade Commission.
The Federal Trade Commission voted unanimously late last month to file a complaint in federal court seeking a preliminary injunction to halt the deal, saying that the merger would allow Lockheed to use its control of Aerojet to hurt other defense contractors while increasing defense sector consolidation. The deal, announced in December 2020, had previously come under fire for potentially giving Lockheed a monopoly on the construction of solid-fuel rocket motors used in a variety of rockets and missiles.
In the statement announcing the cancellation of the merger, Lockheed Martin Chairman, President and CEO James Taiclet reiterated Lockheed’s previous claims that it would have facilitated cost savings and improved efficiency had it gone forwards.
“However, we determined that in light of the FTC’s actions, terminating the transaction is in the best interest of our stakeholders. We stand by our long heritage as a merchant supplier and trusted partner and will continue to support Aerojet Rocketdyne and other essential suppliers in the Defense Industrial Base still overcoming the challenges of the pandemic.
Moving forward, we will maintain our focus on the most effective use of capital with the highest return on investment, including our ongoing commitment to return value to shareholders. We remain confident in our company’s strong foundation and growth potential as several exciting projects enter production.”
In a separate statement, Aerojet said that it had a “strong foundation” despite the demise of the merger. The company added that it was “confident in our future performance”, ahead of the release of its fourth quarter earnings report on February 17.
The companies began to work together in 2019 when Lockheed Martin chose Aerojet Rocketdyne to provide the solid-fuel rocket motor for its hypersonic missile project for the United States Air Force.
A Lockheed spokesman previously told Reuters that the company was not planning to pay any termination fees to Aerojet, with regulatory filings stating that the merger agreement did not have a termination fee in the event that the sale was opposed by antitrust regulators.