Maxar, Aerojet Rocketdyne Agree to $6.4B and $4.7B Takeovers

Maxar WorldView legion render
Image: Maxar

On Friday morning, the markets woke up to quite a surprise: A PE firm was taking Maxar ($MAXR) private in a mega-deal worth $6.4B. Then, we saw a monster merger confirmed Sunday evening, with L3Harris ($LHX) agreeing to buy Aerojet Rocketdyne ($AJRD).

$MAXR take-private 

Maxar’s board voted unanimously to enter into a definitive merger agreement with Advent International, a Boston-based private equity group with $89B AUM. It’s one of the largest leveraged buyouts (LBOs) in the last few months. 

Deal terms: Advent will purchase all outstanding shares of common stock for $53/share, a 129% premium over Maxar’s closing price on Dec. 15. The deal includes a 60-day “go-shop” period that ends on the last minute of Valentine’s Day. During those 60 days, Maxar management can solicit takeover bids from other third parties. In the unlikely scenario a better deal is found, then Maxar has the option to nix the Advent arrangement and take the other offer. 

The view from Westminster, CO: Since Advent is paying in cash, Maxar can shed its $2B+ debt load and focus on deploying its delayed, next-gen WorldView Legion constellation without the short-termism and scrutiny that comes with being public. Advent can also use Maxar as a platform investment, from which it can make bolt-on acquisitions with additional EO technologies, satellite operators, and collection capabilities.  

$AJRD finds a new home

L3Harris will buy Aerojet at a purchase price of $58/share, implying a transaction value of $4.7B (including debt). Aerojet makes liquid- and solid-fueled propulsion products for major space players and missile makers. Its key space programs include the SLS’s RS-25 engines, the Orion spacecraft’s main engine, the RL-10, and in-space electric propulsion products. 

Multiple bidders had been interested in the El Segundo, CA company. 

  • Earlier this year, the FTC blocked a $4.4B takeover bid from Lockheed Martin ($LMT), saying the merger could inflate the cost of rocket engines for other contractors or even lock out their access to the supplier.
  • A few weeks ago, Reuters reported that US industrial conglomerate GE was in the running to acquire Aerojet. 
  • Aerojet also faced boardroom drama in recent months. 

Historical backdrop: While L3Harris and Aerojet were quick to tout the deal as a win for the competitive landscape, the US defense industrial base has seen decades of consolidation

Defense conslidation
Image: Commission on the Future of the United Space Aerospace Industry

One example? In 1950, the US had five major solid rocket motor producers. By the 2010s, there were just two: Orbital ATK and Aerojet Rocketdyne. Orbital ATK was snapped up by Northrop Grumman ($NOC) in 2018, and by mid-2023, it seems that Aerojet Rocketdyne will be part of L3Harris. 

Key #s, at a glance: Aerojet made nearly $2.2B in 2021. In a Dec. 18 deck, the company said it expects that number to grow to $2.5B in 2024. It has 5,000+ employees, ~30% of which are engineers, and touts 14 “strategically placed facilities” across the country. 

+ Stock pulse check: Shares of $AJRD were up 2% in premarket trading, while $LHX was off by 1.7%. 

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