L3Harris ‘optimistic’ Aerojet Rocketdyne acquisition to close in 2023

FTC regulators and DoD continue to review the proposed merger

WASHINGTON — L3Harris Technologies CEO Christopher Kubasik said Jan. 27 that regulators continue to review the company’s proposed $4.7 billion acquisition of Aerojet Rocketdyne and expects the merger to close in 2023.

L3Harris, headquartered in Melbourne, Florida, is a global defense and aerospace company with more than $17 billion in annual revenue. In December it announced an agreement to acquire Aerojet Rocketdyne, a Sacramento, California-based manufacturer of rocket engines and propulsion systems for spacecraft, ballistic missiles and military tactical weapons.

During a result for the fourth quarter call, Kubasik said the company has responded to questions from Federal Trade Commission antitrust regulators. He said L3Harris executives have met with Pentagon officials to address questions about the acquisition of Aerojet Rocketdyne and its potential impact on defense programs.

Kubasik did not comment on one recent letter sent by Sen. Elizabeth Warren (D-Mass.) to the Federal Trade Commission urging the agency to block the transaction. The FTC last year blocked Lockheed Martin’s proposal $4.4 billion bid for Aerojet Rocketdyne, claiming that the combination would give Lockheed — a major supplier of tactical missiles — the ability to “cut off other defense contractors from the critical components they need to build competing missiles.”

L3Harris said it does not expect to face the same challenges because the combination with Aerojet would be a “horizontal movement” rather than a vertical integration of a missile manufacturer and a key supplier of propulsion systems.

If the acquisition is approved, Kubasik said, there are no plans to close any major facilities, but he estimates about $50 million in overhead cost savings in the first year. “We both have offices in D.C. We both have offices in Huntsville. There’s some low-hanging fruit there,” he said.

This would be L3Harris’ second of two back-to-back acquisitions. Earlier this month the company closed nearly $2 billion purchase of Viasat’s tactical data link operations.

“We got the TDL done in 92 days, and the integration is already underway, so we can focus on getting Aerojet Rocketdyne approved, and then start the integration,” Kubasik said.

“I don’t see us doing any acquisitions for a couple of years, as you can imagine,” he told analysts. “There are some non-core assets that we’re going to sell, and we’re going to use those proceeds to bring down our debt over the next few years.”

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