Lockheed Martin has made a $4.4 billion offer to acquire rocket engine maker Aerojet Rocketdyne, the companies announced on Sunday.
Speaking with investors on Monday, Lockheed CEO Jim Taiclet said the move to acquire the engine maker was rooted in the future growth of hypersonic weapons and missile defense systems the Pentagon is developing, as well as the growing space business.
In the call, Taiclet and Lockheed CFO Ken Possenriede said the merger had the potential to improve the development of new missile and space systems by allowing engineers across both companies to work closer together.
In naval programs, Aerojet supplies engines for the Navy’s Trident II D-5 submarine-launched ballistic missiles, Raytheon’s Standard Missile-2, SM-3 and SM-6, and the Tomahawk Land Attack Missile. Aerojet is also developing a new propulsion system for the MK 54 lightweight torpedo.
The company also supplies engines for Lockheed and Boeing’s joint venture United Launch Alliance. Lockheed’s space division is its third-largest business, accounting for 18 percent of the company’s 2019 earnings, reported the Los Angeles Times.
The merger, expected to close in the middle of next year, will have to clear regulators in the incoming Biden administration and is viewed by analysts as an early test of how the next White House will handle defense industry consolidation.