Lockheed Martin [LMT] last Friday said the Federal Trade Commission has asked it for additional information about the company’s proposed acquisition of propulsion systems provider Aerojet Rocketdyne
[AJRD] as part of the government’s regulatory review of the deal.
“We are working cooperatively with the Federal Trade Commission as it conducts its review of the transaction and we continue to expect to complete the acquisition in the second half of 2021,” Lockheed Martin said in a statement.
Lockheed Martin’s statement followed a public comment last week by the head of Raytheon Technologies Corp. [RTX], whose defense business relies on Aerojet Rocketdyne’s tactical solid rocket motors for many of its missile products.
“We obviously have some concerns about that,” Gregory Hayes, RTC’s CEO, said on Feb. 17 during an investor presentation with the financial services firm Barclays. “They are a huge supplier to us and, if that merger actually happens, you don’t have an independent supplier in [the] solid rocket motor side and also I think [it] gives us pause as we think about the competitive landscape going forward. So, we’re going to make our concerns known to the DoJ and Department of Defense and we’ll see how this whole thing plays out.”
Lockheed Martin in late December said it had reached an agreement to acquire Aerojet Rocketdyne for $4.4 billion and pointed out that it would maintain Aerojet Rocketdyne’s status as a merchant supplier to other companies in the defense industry just as Northrop Grumman [NOC] was required to do by the U.S. government when it acquired Orbital ATK, which also supplies tactical rocket motors and other propulsion systems to the aerospace and defense industry.
“The acquisition of Aerojet Rocketdyne will enhance Lockheed Martin’s ability to develop and supply advanced products in support of national security and civil space objectives,” Lockheed Martin said last Friday. “Following the close of the transaction, the Aerojet Rocketdyne business will continue to serve as a merchant supplier, providing outstanding and innovative propulsion products for the entire industry.”
The FTC’s request for additional information extends the Hart-Scott-Rodino Act waiting period for the review for another 30 days after Lockheed Martin and Aerojet Rocketdyne comply with the government’s request. The FTC could also terminate the waiting period sooner.
Aerojet Rocketdyne’s shareholders must also approve the deal.