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Tags: federal trade commission | lockheed | aerojet | lawsuit | block

FTC to Suing to Block Lockheed Martin's $4.4 Billion Aerojet Deal

FTC to Suing to Block Lockheed Martin's $4.4 Billion Aerojet Deal
(Luckydoor/Dreamstime.com)

Tuesday, 25 January 2022 11:35 AM

The Federal Trade Commission has voted unanimously to sue to block arms maker Lockheed Martin Corp's proposed $4.4 billion purchase of rocket engine maker Aerojet Rocketdyne Holdings Inc over antitrust concerns, the agency said on Tuesday.

Aerojet's shares fell 16.7% to $37.55 in early trading on Tuesday. Lockheed's offer valued Aerojet at $51 per share but had been trading below the offer because of investor concerns over the FTC's antitrust review.

Lockheed said in its earnings announcement on Tuesday morning that it had been told by the FTC that its "concerns regarding the transaction cannot be adequately addressed by a consent order," which would require Lockheed to either abandon the deal or launch a lawsuit to close the purchase.

The deal has drawn criticism because it would give Lockheed, the No. 1 U.S. defense contractor by revenue, a dominant position over a vital piece of the U.S. missile industry. Missile maker Raytheon has been an outspoken opponent of the proposed deal.

The deal has attracted opposition in the U.S. Congress including from Senator Elizabeth Warren. She has expressed keen interest in corporate behavior and asked the FTC to examine the premise and efficacy of internal firewalls such as those Lockheed has proposed to prevent it from gaining a competitive advantage over peers once the deal closes, according to a July 16 https://www.reuters.com/business/aerospace-defense/senator-warren-questions-lockheeds-antitrust-solution-buy-aerojet-2021-07-20 letter.

Warren more generally has asked the FTC to take a tougher look at defense industry mergers.

The U.S. Department of Defense drafted a memo last fall that did not oppose the deal outright, but expressed that if merged the company should follow guidelines on how it conducted business, according to a person familiar with the memo.

Lockheed has said it accounted for 33% of Aerojet's sales and the deal would reduce "fee-on-fee" costs for the Pentagon and the U.S. taxpayer.

Rocket motors like those made by Aerojet are used in everything from the homeland defensive missile system to Stinger missiles.

The deal, announced in late 2020, would be Lockheed's first large acquisition under new CEO Jim Taiclet and would reshape the competitive landscape for solid rocket fuel missiles used in jets and drones.

Aerojet develops and manufactures liquid and solid rocket propulsion, air-breathing hypersonic engines and electric power and propulsion for space, defense, civil and commercial applications. Its customers include the Pentagon, NASA, Boeing , Lockheed Martin, Raytheon Technologies and the United Launch Alliance.

© 2022 Thomson/Reuters. All rights reserved.


Newsfront
The Federal Trade Commission has voted unanimously to sue to block arms maker Lockheed Martin Corp's proposed $4.4 billion purchase of rocket engine maker Aerojet Rocketdyne Holdings Inc over antitrust concerns, the agency said on Tuesday.Aerojet's shares fell 16.7% to...
federal trade commission, lockheed, aerojet, lawsuit, block
397
2022-35-25
Tuesday, 25 January 2022 11:35 AM
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