In the first major transaction of 2026, L3Harris Technologies ($LHX) is shedding the bulk of its propulsion business—and Rocketdyne is so back.
Defense prime L3Harris is selling off a 60% stake of its propulsion business to AE Industrial Partners, or AEI ($ZABQLX), for $845M.
- Some back-of-the-napkin math values the propulsion business at about $1.4B.
- L3Harris will hold onto the remaining 40%.
- The transaction excludes the business for the RS-25 rocket engine—largely developed for the space shuttle and now used on the SLS rocket.
Under AEI’s new majority ownership, the new business will take back the name Rocketdyne, AEI said.
The rise and fall: L3Harris acquired the propulsion business in 2022 with its $4.7B purchase of Aerojet Rocketdyne. The sale—which saw L3Harris beat out other prospective buyers, including Lockheed Martin and the entity then known as General Electric—followed years of consolidation in the propulsion sector. Now, however, things look a little different, with new propulsion startups bringing competition back.
AEI isn’t new to investing in space. The firm has stakes in York Space Systems, Firefly Aerospace, and Redwire.
What’s to come: L3Harris also announced yesterday that it is reorganizing its structure from four business segments to three:
- Space and mission systems
- Communications and spectrum dominance
- Missile solutions
These new segments are meant to more closely align with the company’s military commitments—and probably are also due to a larger industry emphasis on the military, due to increased government spends. (For reference, the old segments were communication systems, integrated mission systems, space and airborne systems, and Aerojet Rocketdyne.)
L3Harris’ earnings release on Jan. 29 will organize results into the new categories. The sale itself is expected to close in the latter half of 2026.
+ Market check: $LHX ended the day trading up 2.3%.
