U.S. arms maker and Pentagon’s No.1 weapons supplier Lockheed Martin Corp has announced that it will buy rocket engine maker Aerojet Rocketdyne for $4.4 billion.
Lockheed Martin released a statement on Monday saying that “it has entered into a definitive agreement to acquire Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) for $56 per share in cash, which is expected to be reduced to $51 per share after the payment of a pre-closing special dividend.”
Also noted that this represents a post-dividend equity value of $4.6 billion and a total transaction value of $4.4 billion including the assumption of net cash.
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As part of approving the transaction, Aerojet Rocketdyne announced a special cash dividend, revocable at its option through the payment date, of $5 per share to its holders of record of common stock and convertible senior notes (on an as-converted basis) as of the close of business on March 10, 2021, and payable on March 24, 2021.
“Acquiring Aerojet Rocketdyne will preserve and strengthen an essential component of the domestic defense industrial base and reduce costs for our customers and the American taxpayer,” said James Taiclet, Lockheed Martin president and CEO. “This transaction enhances Lockheed Martin’s support of critical U.S. and allied security missions and retains national leadership in space and hypersonic technology. We look forward to welcoming their talented team and expanding Lockheed Martin’s position as the leading provider of 21st century warfare solutions.”
With 2019 revenue of approximately $2 billion, nearly 5,000 employees, and 15 primary operations sites across the United States, Aerojet Rocketdyne is a world-recognized aerospace and defense rocket engine manufacturer. Aerojet Rocketdyne has deep customer relationships and significant demand for its innovative technologies. The proposed acquisition adds substantial expertise in propulsion to Lockheed Martin’s portfolio, and expands on the solid foundation built by Lockheed Martin and Aerojet Rocketdyne over many years. Aerojet Rocketdyne’s propulsion systems are already a key component of Lockheed Martin’s supply chain and several advanced systems across its Aeronautics, Missiles and Fire Control and Space business areas.
Following the news, Mathew George, Ph.D., Aerospace, Defense and Security Analyst at GlobalData, a leading data and analytics company, said that: “Lockheed Martin is shooting for the stars, focusing on the renewed commercial space race. However, while buying out Aerojet Rocketdyne will bring these two collaborators closer, we shouldn’t forget that these companies are also making huge strides in hypersonic technologies. In fact, Lockheed Martin and Aerojet Rocketdyne were noted to be market leaders in GlobalData’s thematic report on Hypersonic Technologies.“
“There is, of course, an increasing interest in commercial space activities – and there will be a lot for Aerojet and Lockheed to develop together – but there is a whole exciting hypersonic world out there with innovation and breakthroughs in the offing. Those are the defense contracts that helped increase the sales and profits of these companies, even during the pandemic, so it would be a surprise if these two powerhouses of aerospace and defense would not make progressions here,“ added Mathew George.
“The merger is naturally expected to bring further advances in propulsion technology, as well as a reduction in costs to taxpayers – as mentioned by Lockheed Martin CEO Taiclet,” said analyst.
