(Reuters) – Lockheed Martin Corp said on Sunday that it has agreed to buy US rocket engine maker Aerojet Rocketdyne Holdings Inc. for $ 4.4 billion, including debt and net cash.
The deal is Lockheed’s biggest acquisition since Jim Tylett took over as chief executive in June. He is trying to increase the company’s propulsion capabilities amid competition between new entrants such as SpaceX and Blue Origin for space contracts with the US government.
“The acquisition of the Aero Jet Rocket will preserve and strengthen an essential component of the domestic defense industrial base and reduce costs for our customers and American taxpayers,” Tylett said in a statement.
Aerojet Drake, CEO of Aerojet, said in a statement, “As part of Lockheed Martin, we will bring together our advanced technologies and resources to accelerate our shared objective.
Lockheed said it would pay $ 56 a share for Aerojet Rocketdyne, a 33 percent premium to Friday’s closing price. The purchase price will be reduced to $ 51 per share upon payment of a pre-closing special dividend.
The Bethesda, Maryland-based company already uses Aerojet Rocketdyne’s propulsion system in its aeronautics, missiles and fire control offerings.
Lockheed said it was expected to be investigated by regulators given the company’s leading position in the defense sector, which is expected to close in the second half of 2021.
Taichlet took the top job at Lockheed in June and by November closed on a deal to buy Integration Innovations Inc., a Huntsville, Alabama-based hypersonic weapon software and systems manufacturer.
Reporting by Mike Stone in Washington, DC; Editing by Greg Rumeliotis and Diane Craft