Lockheed Martin and Aerojet Rocketdyne Part Ways

After a few weeks of tension, Lockheed Martin (NYSE:LMT) has decided to call off its acquisition of missile and rocket propulsion manufacturer Aerojet Rocketdyne (NYSE:AJRD). 

ICYMI: In late January, the FTC sued to block a $4.4B acquisition deal between Lockheed and Aerojet, originally announced in 2020. The commission alleged that the merger would allow Lockheed to inflate the cost of rocket engines for other defense contractors, or even lock out their access to the supplier, and endanger national security.

Canceled: Lockheed and Aerojet had 30 days after the FTC announced its lawsuit to decide whether to continue fighting for the deal or to walk away. Now, just about two weeks later, Lockheed has decided that a protracted legal battle wouldn’t be worth it. 

“This is the agency’s first litigated defense merger challenge in decades,” as the FTC noted in January. Lockheed chief Jim Taiclet said Thursday that the contractor may begin looking for other M&A opportunities.

  • The companies planned for a potential challenge on antitrust grounds, it seems, by not including a termination fee in the terms of the deal.

Looking forward: Despite the acquisition falling through, Aerojet said in a statement that it still expects strong performance as an independent entity. “We are poised to deliver substantial value to our shareholders driven by our continued leadership in key space exploration and defense growth markets, including by advancing hypersonics and strategic, tactical and missile defense systems,” Aerojet said. 

Aerojet will report Q4 and full-year 2021 earnings later this week.