Lockheed Martin, the American aerospace, arms, and defense giant, has reached an agreement with Aerojet Rocketdyne to acquire them for $4.4 billion. The two entities have already been collaborating for years and in several projects, as Aerojet Rocketdyne is an expert in rocket and missile propulsion systems, two elements that are obviously very valuable for Lockheed Martin.
Because the two are American companies, it is unlikely that the state will scrutinize the deal or attempt to stop it. On the matter of anti-trust and monopolistic practices, these are also unlikely to spark any probe interest, because the acquisition is actually happening in response to the rise of big players who are very strong financially. These would be Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin.
Another major U.S. defense contractor, Raytheon, was the only entity to publicly express its objection to the acquisition deal, citing anti-competition issues as they too were using Aerojet Rocketdyne as a supplier. They have promised to challenge the deal on any level they can, but it’ll all fall down to what the Biden administration views on these matters are.
Lockheed Martin’s CEO James Taiclet stated that this is a move that will bring cost reduction in the production of defense systems, translating to a relief that will reach down to the American taxpayer. Lockheed Martin is contracted by the U.S. government and its various agencies (CIA, IRS, FBI), as well as the NSA, the Pentagon, the U.S. Air Force, and more.
The price of the deal corresponds to a valuation of $56 per share, which is actually 33% higher than the current stock value of Aerojet Rocketdyne. After a dividend cut of $5 per share, the final figure will be at $51 per share. The deal is expected to be completed by H2 2022.