Lockheed Martin to acquire Aerojet Rocketdyne in $4.6B deal
Making a major splash in the aerospace and defense world on Sunday evening, Lockheed Martin announced it has entered into a definitive agreement to acquire Aerojet Rocketdyne.
A release from Lockheed stated that the agreement represents a post-dividend equity value of $4.6 billion, while a separate release from Aerojet Rocketdyne — a leader in the propulsion field — said the total equity value is $5 billion.
The agreement has been unanimously approved by each company’s board of directors, and the transaction is expected to close in the second half of 2021.
Both companies have significant Alabama presences. Lockheed is headquartered in Bethesda, MD; Aerojet Rocketdyne is based out of El Segundo, CA.
Under the terms of the agreement, Lockheed 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 and a premium of approximately 42% to the company’s volume weighted average stock price 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 to $51 per share at closing.
Since 2015, Aerojet Rocketdyne has sourced more than $81 million dollars to Yellowhammer State suppliers. The company currently partners with more than 70 Alabama businesses. Aerojet Rocketdyne officially established its Defense Headquarters in Huntsville in 2016.
Lockheed’s chairman is Marillyn Hewson, a graduate of the University of Alabama.
“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,” stated 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,” Taiclet continued. “We look forward to welcoming their talented team and expanding Lockheed Martin’s position as the leading provider of 21st century warfare solutions.”
A cornerstone of Lockheed’s Yellowhammer State work pertains to hypersonic weapon systems and is based in Lawrence County. The company in recent weeks completed the acquisition of Huntsville-based Integration Innovation Inc.’s (i3) hypersonics portfolio to bolster those efforts, and Aerojet Rocketdyne will now provide even more Rocket City synergy for Lockheed.
Aerojet Rocketdyne in summer 2019 opened its 136,000-square-foot Advanced Manufacturing Facility (AMF) in Huntsville. Since opening, the facility’s workforce has quickly grown 300%, boasting almost 140 personnel as of September. The company expects to further add another 100 jobs at its AMF due to the Ground Based Strategic Deterrent program.
Eileen P. Drake, CEO and president of Aerojet Rocketdyne, said in a statement, “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.”
A transition team will be formed to allow for a seamless integration of Lockheed Martin and Aerojet Rocketdyne in an attempt to ensure continuity for customers, employees and other stakeholders.
Sean Ross is the editor of Yellowhammer News. You can follow him on Twitter @sean_yhn