The Strategist

Lockheed Martin buys engine maker Aerojet Rocketdyne for $4.4B

12/22/2020 - 04:18

Lockheed Martin (LM) has agreed to buy rocket engine manufacturer Aerojet Rocketdyne Holdings, the US military-industrial company, the firm said in a statement.

The parties expect to close the deal in the second half of 2021.

Lockheed Martin has offered $56 in cash for each share. However, Aerojet management has decided to pay its current shareholders $5 as an extraordinary dividend at the close of the deal. These funds will eventually be paid by LM. 

Based on this, the price of the transaction was reduced to $51 per share. As a result, the estimated value of Aerojet after the extraordinary dividend will be $4.6bn, and the amount of cash transferred for the deal will equal $4.4bn.

Lockheed Martin and Aerojet Rocketdyne are longstanding partners in the aerospace industry. The latter, in particular, supplies LM with propulsion systems for its Next Generation Interceptor missile defence system. 

Aerojet employs around 5,000 people in the US and reported revenues of $2bn in 2019.