L3Harris Technologies [LHX] on Wednesday afternoon after the close of the stock markets said the Federal Trade Commission notified the company it would not oppose its $4.7 billion acquisition of Aerojet Rocketdyne
[AJRD], adding that the deal is expected to close on or about this Friday.
The L3Harris announcement essentially came as a footnote in the company’s second quarter investor letter, which includes financial results.
“I’m excited about the next phase of L3Harris,” Christopher Kubasik, the company’s chairman and CEO, wrote in the letter.
L3Harris announced the proposed deal for Aerojet in December 2022, nearly a year after the FTC said it would attempt to block a bid by Lockheed Martin [LMT] to acquire the developer and manufacturer of tactical rocket motors for missiles and munitions, and rocket engines for space launch vehicles. The FTC rejected Lockheed Martin’s proposal due to anti-competitive concerns given that Lockheed makes a wide variety of missiles and munitions and is part of a joint venture with Boeing [BA] that makes space launch vehicles.
The FTC said in early 2022 that a Lockheed Martin combination with Aerojet could result in higher prices for government customers and less innovation.
But L3Harris does not make space launch vehicles and munitions, likely giving the FTC assurance that the Aerojet business would essentially remain an independent merchant supplier to the broader aerospace and defense industry.
The other major supplier of solid rocket motors and rocket engines is Northrop Grumman [NOC] via its acquisition in 2018 of Orbital ATK. The FTC at the time required Northrop Grumman to erect firewalls to ensure its new rocket and motor business remained a merchant supplier to its competitors in the munitions and launch vehicle markets.
But more competition is coming.
In June, Anduril Industries said it had acquired Adranos Inc., a developer of solid rocket motors that it expects in the near-term to be supplying to prime contractors for their missiles, hypersonic and other propulsion systems.
Anduril develops much of its technology using a commercial model and is considered a disruptor as a relatively new entrant in the defense and security markets.
Christian Brose, Anduril’s chief strategy officer, told Defense Daily at the time of the deal that Anduril will be “supercharging” Adranos’ efforts in the solid rocket motor space and is eyeing specific programs to compete to become a new supplier on weapons systems. He also said that the U.S. needs more production capacity for tactical rocket motors as evidenced by the strain on the nation’s munitions stockpiles that are being used to support Ukraine in its war against Russia.
Brose also lamented that the current rocket motor suppliers have not been leading the way on innovation.
In addition to Anduril, there are a number of new entrants in the rocket motor and engine space, including Rocket Lab [RKLB], X-Bow Systems, Firefly Aerospace, and others.