Lockheed Martin Corp acquires rocket engine manufacturer Aerojet Rocketdyne Holdings Inc for $4.4 billion

In a statement Lockheed Martin Corp said, it has agreed to acquire U.S. rocket engine manufacturer Aerojet Rocketdyne Holdings Inc for $4.4 billion, including debt and net cash.

The deal marks Lockheed’s biggest acquisition since its CEO Jim Taiclet became its CEO in June. He is looking at beefing up the company’s propulsion capabilities midst growing competition from new entrants including Blue Origin and SpaceX, for U.S. government contracts for space launches.

“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,” said Taiclet in a statement.

“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” said Aerojet’s CEO Eileen Drake said in a statement.

As part of the deal, Lockheed will be paying $56 per share for Aerojet Rocketdyne, representing a 33% premium to Friday’s closing price. The purchase price will be reduced to $51 per share after the payment of a pre-closing special dividend, said Lockheed.

Lockheed expects to close the deal by the second half of next year. It also expects the deal to be scrutinized by regulators given its leading position in the defense sector.

Earlier this year, Taiclet also closed a deal to acquire Huntsville, Alabama-based hypersonic weapon software and systems maker Integration Innovation Inc this November.

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