Lockheed Martin to acquire Aerojet Rocketdyne for £3.30 billion

In an announcement on Sunday, Lockheed Martin Corp (NYSE: LMT) said it will buy Aerojet Rocketdyne Holdings Inc. (NYSE: AJRD) in a deal valued at £3.30 billion.

At £267 per share, Lockheed Martin is currently more than 10% down year to date in the stock market after recovering from a significantly lower £208 per share in March. The price action should come in handy if you’re interested in investing in markets.

Lockheed reported an 8.7% growth in Q3 sales

The deal with the California-based rocket engine manufacturer that includes debt and net cash marks the largest acquisition for Lockheed since June when its new CEO Jim Taiclet took the helm. In a report published in October, Lockheed Martin had revealed an 8.7% annualised growth in its third-quarter sales. At the time of writing, Lockheed is valued at £74.77 billion.

To combat the rising competition from new entrants, including Blue Origin and SpaceX, Taiclet is committed to expanding Lockheed’s propulsion capabilities. In a statement on Sunday, Taiclet said:

“Acquiring Aerojet Rocketdyne will preserve and strengthen an essential component of the domestic defence industrial base and reduce costs for our customers and the American taxpayers.”

Lockheed valued Aerojet Rocketdyne at £42.04 per share that translates to a premium of 33% on the price at which the American technology-based manufacturer closed the regular session in the stock market on Friday. The per-share purchase price, as per Lockheed, will be slashed to £38.28 once a pre-closing special dividend is paid.

Aerojet’s CEO Eileen Drake’s comments on Monday

CEO Eileen Drake of Aerojet Rocketdyne also commented on the news and said:

“As part of Lockheed Martin, we will bring our advanced technologies together with their substantial expertise and resources to accelerate our shared purpose: enabling the defence of our nation and space exploration.”

Lockheed’s missiles, aeronautics, and fire control products already make extensive use of Aerojet’s propulsion systems. Following approval from regulators, the Bethesda-based company expects the transaction to be completed next year in the second half.

Taking on the role of Lockheed’s CEO, Taiclet had earlier signed an agreement to acquire Integration Innovation Inc. earlier this year. Integration Innovation is an Alabama-based company that primarily focuses on making hypersonic weapon software and systems.

At the time of writing, Aerojet Rocketdyne Holdings Inc. is valued at £2.44 billion and has a price to earnings ratio of 27.49.