Lockheed abandons $4.4b deal to buy Aerojet amid regulatory hurdles

Lockheed will no longer acquire Aerojet Rocketdyne Holdings Inc. due to the regulatory scrutiny from the United States government.

United States arms manufacturer Lockheed Martin Corp announced earlier today that it had called off its acquisition of rocket engine maker Aerojet Rocketdyne Holdings Inc. This comes following oppositions from the United States antitrust enforcers.

Last month, the Federal Trade Commission sued to block the Aerojet Rocketdyne deal. According to the FTC, Lockheed's acquisition of Aerojet would negatively affect other defense contractors. The deal was previously announced in late 2020, but it will no longer go through.

Following its announcement in 2020, the deal drew criticism from some industry participants, with most of them arguing that the acquisition would give Lockheed a leading position over solid-fuel rocket motors.

Missile maker Raytheon Technologies has been vocal about its opposition to the deal, arguing that it would give Lockheed too much power in the industry.

According to Lockheed's Chief Executive James Taiclet, the acquisition would be beneficial to the United States government by improving efficiency, speed and cutting costs. However, he added that terminating the deal was in the best interest of the stakeholders.

Lockheed stated that it accounted for 33% of Aerojet's sales, adding that the deal would reduce costs for the United States government.

Aerojet stated that despite the scrapping of the deal, it expects a strong future performance. The deal was terminated with no losses from either side. According to the regulatory filings, the merger agreement doesn't include a termination fee in the event that the regulatory agencies oppose the deal.

The FTC added that had the case ended up in court, it would have been the first litigated defence merger case in decades.

The shares of Lockheed are down by more than 2% today and are currently trading around $387.