By Nathalie Voit
Defense and aerospace giant Lockheed Martin terminated its $4.4 billion planned acquisition of rocket engine supplier Aerojet Rocketdyne, according to a news release from the company issued on Feb. 13.
The decision to scrap the merger agreement came amid substantial scrutiny from federal legislators wary of the proposed deal. The agreement, announced in December 2020, would have enabled the “world’s largest defense contractor” to stamp out the nation’s last remaining missile propulsion provider, as per a Federal Trade Commission (FTC) complaint issued on Jan. 25.
The FTC voted unanimously to sue to block the proposed $4.4 billion purchase, citing the pending deal’s anticompetitive effects.
“Lockheed is one of a few missile middlemen the U.S. military relies on to supply vital weapons that keep our country safe. If consummated, this deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles,” said FTC Bureau of Competition Director Holly Vedova in an agency release.
“Without competitive pressure, Lockheed can jack up the price the U.S. government has to pay, while delivering lower quality and less innovation. We cannot afford to allow further concentration in markets critical to our national security and defense,” she warned.
In response to the federal scrutiny, Lockheed Martin withdrew its plans to acquire the leading rocket and missile systems manufacturer.
“Our planned acquisition of Aerojet Rocketdyne would have benefitted the entire industry through greater efficiency, speed, and significant cost reductions for the U.S. government,” said CEO of Lockheed Martin James Taiclet said in an announcement. “However, we determined that in light of the FTC’s actions, terminating the transaction is in the best interest of our stakeholders.”
Aerojet also issued a statement following the termination of the planned merger.
The company specified it is “poised to deliver substantial value to our shareholders driven by our continued leadership in key space exploration and defense growth markets, including by advancing hypersonics and strategic, tactical and missile defense systems.”
“We are confident in our future performance with an impressive backlog that is more than three times the size of our annual sales and a strong macroeconomic environment underpinning our portfolio,” Aerojet said on Sunday.
