{"id":11942,"date":"2020-12-22T00:31:16","date_gmt":"2020-12-21T16:31:16","guid":{"rendered":"https:\/\/wp-productionenv-bjg9h2g2bgg5b8aa.southeastasia-01.azurewebsites.net\/news\/lockheed-martin-to-buy-rocket-engine-builder-aerojet-rocketdyne\/"},"modified":"2020-12-22T00:31:16","modified_gmt":"2020-12-21T16:31:16","slug":"lockheed-martin-to-buy-rocket-engine-builder-aerojet-rocketdyne","status":"publish","type":"post","link":"https:\/\/starpath.global\/news\/lockheed-martin-to-buy-rocket-engine-builder-aerojet-rocketdyne\/","title":{"rendered":"Lockheed Martin to buy rocket engine-builder Aerojet Rocketdyne"},"content":{"rendered":"
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An Aerojet Rocketdyne RL10C-X prototype engine, which includes 3D-printed core components, undergoes hotfire testing at Aerojet Rocketdyne\u2019s facility in West Palm Beach, Florida. Credit: Aerojet Rocketdyne<\/figcaption><\/figure>\n

Lockheed Martin, the largest U.S. defense contractor, announced late Sunday that it has reached a deal valued at $4.4 billion to acquire Aerojet Rocketdyne, a supplier of engines to NASA\u2019s Space Launch System moon rocket and United Launch Alliance\u2019s Atlas, Delta, and Vulcan rockets.<\/p>\n

The acquisition is another step in consolidation among U.S. aerospace contractors, following the $9.2 billion purchase of solid rocket builder Orbital ATK by Northrop Grumman in a deal that closed in 2018. The agreement announced Sunday will bring Aerojet Rocketdyne, one of the top U.S. providers of liquid rocket propulsion systems, under the umbrella of Lockheed Martin.<\/p>\n

\u201cThe acquisition of Aerojet provides an opportunity to fully integrate a key component of our value chain, utilize our combined manufacturing expertise to improve efficiencies and production operations, and ultimately position us to be more competitive for our customers by harnessing the talent and skill of both Lockheed Martin and Aerojet Rocketdyne employees,\u201d said Jim Taiclet, CEO of Lockheed Martin.<\/p>\n

\u201cWe will deliver more innovative and affordable solutions to better meet our customers most challenging areas as a critical partner across our portfolio already, and this helps position us for even greater growth in hypersonics, missile defense, and space, which are key elements of the national defense strategy,\u201d Taiclet said in a conference call with investment analysts Monday morning.<\/p>\n

Taiclet said the purchase of Aerojet Rocketdyne has \u201creal upside\u201d for Lockheed Martin.<\/p>\n

\u201cHaving the engineers as part of the same organization as they design integrated propulsion and overall system products, I think, is going to make Lockheed Martin, especially missiles and file control and space, much more effective,\u201d Taiclet said. \u201cWe\u2019ll also be faster to market. We\u2019ll be also be more efficient \u2026 in other words less expensive to the end customer to deliver that product.\u201d<\/p>\n

Aerojet Rocketdyne was formed in 2013 by the merger of GenCorp, parent company of Aerojet, with Pratt & Whitney Rocketdyne.<\/p>\n

The Rocketdyne business was established as a unit of North American Aviation in 1955, then became part of Rockwell International and Boeing through a series of defense industry consolidations. Pratt & Whitney bought the Rocketdyne business from Boeing in 2005 and held onto it until the merger with Aerojet in 2013.<\/p>\n

Rocketdyne built the powerful F-1 main engines for NASA\u2019s Saturn 5 moon rocket and the reusable hydrogen-fueled main engines for the space shuttle. The remaining shuttle main engines, known as RS-25s, are being repurposed for NASA\u2019s Space Launch System, a powerful launcher designed to send people back to the moon later this decade.<\/p>\n

Aerojet was founded in 1942 and developed engines for the Titan rocket family, the engine for the Apollo service modules that flew to the moon, and orbital maneuvering system engines for the space shuttle.<\/p>\n

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Four RL10 engines delivered to NASA for use on the Space Launch System upper stage. Credit: Aerojet Rocketdyne<\/figcaption><\/figure>\n

But Aerojet Rocketdyne has been pressured by competition from commercial space companies like SpaceX and Blue Origin, led by billionaire entrepreneurs Elon Musk and Jeff Bezos. SpaceX\u2019s Falcon 9 and Falcon Heavy rockets the firm\u2019s own engines, and the company\u2019s success in reusing rockets has cut costs, allowing SpaceX to take the lion\u2019s share of new commercial launch contracts in recent years, and a growing percentage of government launch deals.<\/p>\n

Taiclet said Lockheed Martin will fund the acquisition using new debt financing and cash on hand. The deal gives Aerojet Rocketdyne an equity value of $5 billion, but the transaction value will be $4.4 billion after Aerojet Rocketdyne issue a \u201cspecial dividend\u201d to its shareholders.<\/p>\n

\u201cThe total consideration to be paid for Aerojet Rocketdyne is approximately 90 million shares, which \u2026 includes their convertible notes, will come to approximately $4.6 billion,\u201d said Kenneth Possenriede, Lockheed Martin\u2019s chief financial officer. \u201cWe will then pay off about $315 million of their term loan debt, and considering their projected cash balance, we see a projected transaction value of approximately $4.4 billion at closing.\u201d<\/p>\n

Aerojet Rocketdyne\u2019s existing propulsion contracts with NASA include refurbishment of existing RS-25 engines for SLS missions, and the production of 24 new RS-25 engines for future SLS flights. NASA is paying Aerojet Rocketdyne nearly $3.5 billion for the manufacturing of the 24 new engines.<\/p>\n

The company also builds RL10 upper stage engines used on the Space Launch System and on United Launch Alliance\u2019s Atlas 5 and Delta 4 rockets, along with the the RS-68A first stage engine on the Delta 4. Aerojet Rocketdyne is also a supplier of rocket thrusters and electric propulsion systems used on numerous government and commercial spacecraft, including NASA\u2019s Orion crew capsule for lunar missions and Boeing\u2019s Starliner spacecraft to ferry crews to the International Space Station.<\/p>\n

Faced with competition from SpaceX, ULA is developing a next-generation rocket named the Vulcan Centaur, and will retire the Atlas 5 and Delta 4 rocket in a few years.<\/p>\n

ULA, a 50-50 joint venture between Boeing and Lockheed Martin, considered using a new engine from Aerojet Rocketdyne for the first stage of the Vulcan Centaur rocket. But the launch provider ended up selecting the BE-4 reusable methane-fueled engine made by Blue Origin, Jeff Bezos\u2019s space company.<\/p>\n

The Vulcan Centaur\u2019s strap-on solid rocket boosters will be made by Northrop Grumman, using know-how acquired from Orbital ATK. ULA began flying a version of the new Northrop Grumman booster last month on an Atlas 5 rocket launch, replacing strap-on motors from Aerojet Rocketdyne that launched on previous Atlas 5 rockets.<\/p>\n

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The four RS-25 engines installed on the first SLS core stage. Credit: Aerojet Rocketdyne<\/figcaption><\/figure>\n

Despite the loss of some of its ULA business, Aerojet Rocketdyne\u2019s long-term multibillion-dollar contracts to support NASA\u2019s Space Launch System and military projects has kept the company profitable.<\/p>\n

Aerojet Rocketdyne also makes components for the Pentagon\u2019s missile defense programs, and works on hypersonic propulsion for long-range military weapons systems and interceptors.<\/p>\n

Lockheed Martin officials said Monday that the company\u2019s acquisition of Aerojet Rocketdyne, pending approval from government regulators and by Aerojet Rocketdyne shareholders, is expected to close in the second half of 2021.<\/p>\n

Taiclet, Lockheed Martin\u2019s chief executive, said there are \u201coperational benefits\u201d to integrating Aerojet Rocketdyne\u2019s propulsion systems with programs already in Lockheed Martin\u2019s portfolio. Those include improved efficiency, tighter engineering integration, and better production planning, Taiclet said, strengthening Lockheed Martin\u2019s capabilities in hypersonic programs, air and missile defense, and space exploration.<\/p>\n

\u201cWe believe Aerojet Rocketdyne customers will also benefit, with Lockheed Martin providing engineering and manufacturing support to help them become an even better merchant suppler of propulsion products in the defense and space domain,\u201d Taiclet said.<\/p>\n

Taiclet said one area of savings for Lockheed Martin and Aerojet Rocketdyne customers will come in the elimination of subcontractor fees.<\/p>\n

\u201cThere\u2019s a phenomenon in our industry, fee on fee, meaning if we have a subcontractor, they\u2019ll be charging their fee through us, and we\u2019ll be charging our fee to the end customer,\u201d Taiclet said. \u201cIf we can take out one of those fee levels, the overall product will be more affordable to our end customer.\u201d<\/p>\n

Possenriede said ULA represents about 10% of Aerojet Rocketdyne\u2019s sales. Although Lockheed Martin owns 50% of ULA, the company expects to to continue including a fee in its sales of Aerojet Rocketdyne products to ULA, Possenriede said.<\/p>\n

\u201cWe then would be a supplier to ULA,\u201d he said. \u201cWe have an equity interest in ULA, but we don\u2019t see any reason why we wouldn\u2019t continue to put fee. It would still be a competitive price, of course, continue putting fee on our product as we sell into ULA.\u201d<\/p>\n

\u201cWe 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,\u201d said Eileen Drake, CEO and president of Aerojet Rocketdyne, in a statement.<\/p>\n

\u201cJoining Lockheed Martin is a testament to the world-class organization and team we\u2019ve built and represents a natural next phase of our evolution,\u201d Drake said. \u201cAs 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.\u201d<\/p>\n

Email the author.<\/i><\/b><\/p>\n

Follow Stephen Clark on Twitter: @StephenClark1.<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

An Aerojet Rocketdyne RL10C-X prototype engine, which includes 3D-printed core components, undergoes hotfire testing at Aerojet Rocketdyne\u2019s facility in West Palm Beach, Florida. Credit: Aerojet Rocketdyne Lockheed Martin, the largest U.S. defense contractor, announced late Sunday that it has reached a deal valued at $4.4 billion to acquire Aerojet Rocketdyne, a supplier of engines to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[864,304,724,291,1688,1408,1775,25],"class_list":["post-11942","post","type-post","status-publish","format-standard","hentry","category-news","tag-aerojet-rocketdyne","tag-artemis","tag-atlas-5","tag-commercial-space","tag-delta-4","tag-delta-4-heavy","tag-electric-propulsion","tag-launch"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/11942"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=11942"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/11942\/revisions"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=11942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=11942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=11942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}