Aerojet Rocketdyne
Aerojet Rocketdyne’s RS-25 liquid-fuel cryogenic rocket engine -- used on NASA's Space Shuttle and its successor, the Space Launch System.

FTC Sues Lockheed, Aerojet to Block Takeover

Jan. 25, 2022
The Federal Trade Commission claims the proposed $4.4-billion deal would allow Lockheed to cut off other defense contractors and raise U.S. defense/security costs.

The U.S. Federal Trade Commission is suing Lockheed Martin Corp. to block its proposed, $4.4-billion takeover of Aerojet Rocketdyne Holdings Inc, a supplier of missile propulsion systems. FTC contends that Lockheed would use its control of Aerojet – a supplier of advanced power, propulsion, and armament systems that are critical components of missile systems – undercutting the competitiveness of other defense contractors (e.g., Boeing, Northrop Grumman, Raytheon Technologies), and consolidating several national defense/security markets.

Both Lockheed and Aerojet could choose to defend the lawsuit or terminate the merger agreement, though neither one has offered a response as yet.

Alternatively, Lockheed could terminate the merger agreement.

FTC noted this suit represents its first litigated challenge to a defense-sector merger in “decades”.

“The FTC is suing to block Lockheed Martin, the world’s largest defense contractor, from eliminating Aerojet, our nation’s last independent supplier of key missile inputs,” stated FTC Bureau of Competition Director Holly Vedova.

“Lockheed is one of a few missile middlemen the U.S. military relies on to supply vital weapons that keep our country safe,” she continued. “If consummated, this deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles.

“Without competitive pressure,” Vedova added, “Lockheed can jack up the price the U.S. government has to pay, while delivering lower quality and less innovation. We cannot afford to allow further concentration in markets critical to our national security and defense.”

FTC’s contention challenges Lockheed’s proposition when it announced the takeover agreement in December 2020. "Acquiring Aerojet Rocketdyne will preserve and strengthen an essential component of the domestic defense industrial base and reduce costs for our customers and the American taxpayer," stated Lockheed president and CEO James Taiclet at that time.

Taiclet announced on a Q4 earnings conference call that Lockheed plans to review the lawsuit and evaluate its options.

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