Aerojet Rocketydyne shareholders approve Lockeed Martin takeover request

In a special shareholder meeting on 9 March 2021, Aerojet Rocketdyne shareholders approved the merger agreement providing for the proposed acquisition of Aerojet Rocketdyne by Lockheed Martin Corporation.

This proposal is still being challenged by Raytheon, citing concerns that there are too few companies involved in producing key missile and rocket components. Aerojet Rocketdyne has also entered into a billion-dollar strategic agreement with Raytheon for propulsion for a range of missiles, including further hypersonic missile developments.¹

Current plans will have the merger go through in the second half of 2021.

This is similar to Northrop Grumman’s $7.8 billion acquisition of rocket maker Orbital ATK in 2018. In both cases, a defense contractor aims to widen its reach by acquiring a company that specializes in rocket propulsion and space. Pushback from Boeing and Raytheon is not unexpected, as both companies rely on Aerojet’s rocket motors for missile production.²

Will Boeing join in the fray?

Considering Boeing’s strong opposition to the takeover of Orbital ATK – now known as Northrop Grumman Innovation Systems – by Northrop Grumman in 2018, it can only be expected that they will also oppose the acquisition of Aerojet Rocketdyne by Lockheed Martin. The acquisition by Northrop Grumman of Orbital ATK – one of the only two U.S. solid-fuel rocket motor manufacturers – formed the reason for Boeing to drop out of competition to build new intercontinental ballistic missiles.³

Boeing argued that the acquisition of Orbital ATK gave Northrop an unfair advantage in terms of being able to offer the lowest-cost system. Subsequently, Boeing pushed the Air Force to do something about this unfair situation and asked them to mandate a joint bid with Northrop Grumman. The Air Force, however, declined to intervene.⁴ The Federal Trade Commission did order Northrop to make Orbital ATK motors available to competitors on a non-discriminatory basis to mitigate the advantage they acquired, but Boeing noted that such agreements are difficult to enforce.⁵

Despite these previous developments, Boeing has not yet issued an official response in relation to the approved acquisition. It is quite possible that Boeing would have wanted to acquire Aerojet Rocketdyne themselves. However, since Boeing was strongly hit by the coronavirus pandemic which undercut the demand for commercial aircraft and due to Boeing’s quality-control problems in several programs and the associated extra costs, the company does not have the resources to attempt a merger.⁶

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