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  Lockheed Martin to acquire Aerojet Rocketdyne

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Author Topic:   Lockheed Martin to acquire Aerojet Rocketdyne
Robert Pearlman
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Posts: 47834
From: Houston, TX
Registered: Nov 1999

posted 12-20-2020 06:37 PM     Click Here to See the Profile for Robert Pearlman   Click Here to Email Robert Pearlman     Edit/Delete Message   Reply w/Quote
Aerojet Rocketdyne release
Aerojet Rocketdyne to be Acquired by Lockheed Martin in $5.0 Billion All-Cash Transaction

Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) today [Dec. 20, 2020] announced that it has entered into a definitive agreement to be acquired by Lockheed Martin Corporation (NYSE: LMT) in an all-cash transaction with a total equity value of $5.0 billion.

Under the terms of the agreement, which has been unanimously approved by each company's Board of Directors, Lockheed Martin will acquire Aerojet Rocketdyne for $56.00 per share in cash, representing a premium of approximately 33% to Aerojet Rocketdyne's closing stock price on December 18, 2020 and a premium of approximately 42% to the Company's volume weighted average stock price ("VWAP") for the last 90 trading days.

As part of the transaction, Aerojet Rocketdyne declared a $5 per share pre-closing special dividend to holders of its common shares and convertible senior notes, on an as-converted basis. The special dividend will be paid on March 24, 2021, to holders of record as of March 10, 2021. The payment of this special dividend, unless revoked, will adjust the consideration to be paid by Lockheed Martin to $51 per share at closing.

"We are pleased to bring together our complementary companies in a transformative transaction that will provide premium cash value for our shareholders and tremendous benefits for our employees, customers and partners," said Eileen P. Drake, CEO and President of Aerojet Rocketdyne. "Joining Lockheed Martin is a testament to the world-class organization and team we've built and represents a natural next phase of our evolution. As part of Lockheed Martin, we will bring our advanced technologies together with their substantial expertise and resources to accelerate our shared purpose: enabling the defense of our nation and space exploration. On behalf of the Aerojet Rocketdyne Board and management team, I'd like to thank all of our employees for their unwavering dedication and focus in helping us achieve this great milestone."

The transaction is expected to close in the second half of 2021 and is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by Aerojet Rocketdyne's stockholders. A transition team will be formed to allow for a seamless integration and ensure continuity for customers, employees and other stakeholders.

ejectr
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Posts: 1879
From: Killingly, CT
Registered: Mar 2002

posted 12-21-2020 10:31 AM     Click Here to See the Profile for ejectr   Click Here to Email ejectr     Edit/Delete Message   Reply w/Quote
Wasn't Rocketdyne owned by Pratt & Whitney United Technologies? They recently merged with Raytheon and actually changed their name to Raytheon.

Robert Pearlman
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Posts: 47834
From: Houston, TX
Registered: Nov 1999

posted 12-21-2020 10:45 AM     Click Here to See the Profile for Robert Pearlman   Click Here to Email Robert Pearlman     Edit/Delete Message   Reply w/Quote
GenCorp, which owned Aerojet, acquired Pratt & Whitney Rocketdyne from United Technologies in 2013, forming Aerojet-Rocketdyne.

tothemoon
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From: California
Registered: May 2020

posted 12-21-2020 07:32 PM     Click Here to See the Profile for tothemoon   Click Here to Email tothemoon     Edit/Delete Message   Reply w/Quote
Robert's correct, Rocketdyne has had many overlords, North American Aviation to Rockwell to Boeing to Pratt & Whitney (UTC) to Aerojet to next up: Lockheed Martin.

Another instance of vertical integration, looking a lot like the Northrop Grumman acquisition of Orbital ATK.

SkyMan1958
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posted 12-22-2020 01:02 PM     Click Here to See the Profile for SkyMan1958   Click Here to Email SkyMan1958     Edit/Delete Message   Reply w/Quote
While understandable, I'm less than thrilled with the acquisition. Heritage space continues to centralize. Lockheed in theory could have supported launching Orion on some other booster than the SLS. Now, given the RS-25 rocket engines, I'm guessing Lockheed is pretty much locked into the SLS.

Jim Behling
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Posts: 1702
From: Cape Canaveral, FL
Registered: Mar 2010

posted 12-23-2020 12:50 PM     Click Here to See the Profile for Jim Behling   Click Here to Email Jim Behling     Edit/Delete Message   Reply w/Quote
quote:
Originally posted by SkyMan1958:
Lockheed in theory could have supported launching Orion on some other booster than the SLS.
No. Not true. Orion is not Lockheed Martin's property. (It is bad prose not to include "Martin." Using just Lockheed refers to the heritage company.)

Lockheed Martin has a contract with NASA to build Orion and turn it over to NASA. NASA determines what it flies on. Lockheed Martin doesn't even operate Orion. After construction, it is turned over to NASA and NASA's operations contractor, Jacobs, for preflight processing and launch ops.

Robert Pearlman
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Posts: 47834
From: Houston, TX
Registered: Nov 1999

posted 01-25-2022 10:37 AM     Click Here to See the Profile for Robert Pearlman   Click Here to Email Robert Pearlman     Edit/Delete Message   Reply w/Quote
Federal Trade Commission (FTC) release
FTC Sues to Block Lockheed Martin Corporation's $4.4 Billion Vertical Acquisition of Aerojet Rocketdyne Holdings Inc.

Agency Seeks to Prevent World's Largest Defense Contractor from Eliminating Last Independent U.S. Missile Propulsion Provider and Further Consolidating Markets Critical to National Security and Defense

Today (Jan. 25), the Federal Trade Commission sued to block Lockheed Martin Corporation's $4.4 billion proposed vertical acquisition of Aerojet Rocketdyne Holdings Inc, the last independent U.S. supplier of missile propulsion systems. Aerojet supplies advanced power, propulsion, and armament systems, which are critical components for the missiles made by Lockheed and other defense prime contractors. The agency's complaint alleges that if the deal is allowed to proceed, Lockheed will use its control of Aerojet to harm rival defense contractors and further consolidate multiple markets critical to national security and defense. This is the agency's first litigated defense merger challenge in decades.

"The FTC is suing to block Lockheed Martin, the world's largest defense contractor, from eliminating Aerojet, our nation's last independent supplier of key missile inputs," said FTC Bureau of Competition Director Holly Vedova. "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. 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."

The U.S. Department of Defense ("DoD") reviewed the acquisition and considered the potential impacts of the transaction on national security, the nation's industrial and technological base, competition, and innovation. As part this assessment, the DoD facilitated a series of FTC-led interviews with DoD-impacted stakeholders. DoD's assessment was provided to the FTC for its deliberations and final decision-making.

"I deeply appreciate the collaborative relationship between DoD and FTC staff who worked closely throughout this investigation," said Director Vedova. "The FTC determined that the proposed transaction harms competition for several weapons systems that DoD relies on to defend the nation and there is no sufficient remedy to alleviate those harms."

Lockheed is the world's largest defense contractor and a leading missile supplier in a highly concentrated sector. Lockheed, and its U.S missile competitors—Raytheon Technologies, Inc., Northrop Grumman Corporation, and The Boeing Company—act as missile system prime contractors to DoD. These prime contractors are key intermediaries between the U.S. government and the rest of the missile systems supply chain, including the subcontractors such as Aerojet which provide system components to them. DoD relies on prime contractors to develop, produce, sustain, and source a variety of weapons, including missile systems, hypersonic cruise missiles, and missile defense kill vehicles. Each of these weapons depend on critical propulsion technologies of the type supplied by Aerojet.

Aerojet, as a subcontractor, is the last independent U.S. supplier of critical inputs for missile systems, hypersonic cruise missiles, and missile defense kill vehicles. Aerojet and only one other competitor – Northrop Grumman – compete to provide propulsion inputs for missile systems and hypersonic cruise missiles to defense prime contractors. Aerojet and Northrop Grumman both provide solid rocket motors for missile systems and supersonic combustion ramjets, or "scramjets," which are air-breathing engines that propel hypersonic cruise missiles. Further, Aerojet is the only proven U.S. supplier of divert-and-attitude control systems that propel missile defense kill vehicles.

Lockheed's proposed acquisition of Aerojet would give Lockheed control over critical propulsion inputs that its rivals require to compete against Lockheed. Specifically, the complaint alleges that the proposed acquisition would give Lockheed the ability and incentive to deny, limit, or otherwise disadvantage competitors' access to critical propulsion inputs for various weapons systems. The combined firm could disadvantage rivals by affecting the price or quality of the product, the quality of the engineering support, and the schedule and contract terms for developing and supplying it or otherwise disadvantage its rivals. As a subcontractor, Aerojet also has had access to prime contractors' sensitive information about technological advancements, cost, schedule, and business strategies. The complaint alleges that post-acquisition, Lockheed would have an incentive to exploit its access to its rivals' proprietary information to gain an advantage in competitions against them.

The U.S. government in turn would be harmed because the cost of missile systems, missile defense kill vehicles, and hypersonic cruise missiles would likely increase, innovation would be lessened, and quality would be reduced, hindering national security and defense interests.

According to the complaint, the proposed transaction could impact research and development as well as innovation into the future, which is vital to ensure that the U.S. remains a leader in these technologies. As an independent supplier, Aerojet has the incentive to allocate its research and development funds based on the potential return the funds would generate regardless of which prime contractor it is supporting. The complaint alleges that post-acquisition, the combined firm would be incentivized to allocate Aerojet investment dollars for the combined firm's benefit alone, which would stifle innovation.

The Commission vote to issue the administrative complaint (a public version of which will be available and linked to this news release as soon as possible) and to authorize staff to seek a preliminary injunction was 4-0. The FTC will file a complaint in the U.S. District Court for the District of Columbia seeking a Preliminary Injunction to stop the deal pending an administrative trial. The administrative trial is scheduled to begin on June 16, 2022.

NOTE: The Commission issues an administrative complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.

Robert Pearlman
Editor

Posts: 47834
From: Houston, TX
Registered: Nov 1999

posted 02-14-2022 01:00 PM     Click Here to See the Profile for Robert Pearlman   Click Here to Email Robert Pearlman     Edit/Delete Message   Reply w/Quote
Lockheed Martin release
Lockheed Martin Terminates Agreement to Acquire Aerojet Rocketdyne

Lockheed Martin Corporation today (Feb. 13) announced it has terminated its agreement to acquire Aerojet Rocketdyne Holdings, Inc.. The decision to terminate the agreement follows the U.S. Federal Trade Commission's (FTC) lawsuit filed late last month seeking a preliminary injunction to block the acquisition.

"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 Lockheed Martin Chairman, President and CEO James Taiclet. "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.

"Finally, I'm proud of the 114,000 patriotic men and women of Lockheed Martin. They have a principled commitment to deliver the highest quality and most effective solutions to our customers. We will continue to support the United States and its allies through our industry leadership and developing the technologies to ensure effective threat deterrence for decades to come."

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