CNBC by Michael Sheetz 12/21/2020
Lockheed Martin buys Aerojet Rocketdyne to better compete with Musk’s SpaceX, Bezos’ Blue Origin
Key Points• Lockheed Martin intends to acquire rocket engine and spacecraft propulsion maker Aerojet Rocketdyne in a deal that values the company at $4.6 billion.
• “This is clearly a vertical integration play for [Lockheed Martin] and a larger investment on Space,†Bank of America analyst Ron Epstein.
• Aerojet Rocketdyne recently identified both Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin as major competitors in the growing space industry.
• “We have seen SpaceX as an emerging threat [and] they are more than an emerging threat right now,†Lockheed Martin CFO Ken Possenriede said on the company’s third quarter earnings conference call in October.
Lockheed Martin intends to buy Aerojet Rocketdyne at a $4.6 billion equity value, a deal that adds rocket engine and spacecraft propulsion assets to the defense contractor as it competes against the likes of Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin in the growing space industry.
Aerojet Rocketdyne’s business is split between defense and space, with about 60% of its sales to the former and 40% to the latter.
“Near term, the benefit for Lockheed Martin is on the defense side … and then you’re buying some optionality in the space markets down the road, to ideally get more competitive and defend your position,†Canaccord Genuity analyst Ken Herbert told CNBC.
Lockheed Martin is Aerojet’s largest customer, making up about 33% of its sales. United Launch Alliance, or ULA, makes up another 10% of Aerojet’s sales – a further complement to Lockheed Martin, which owns a 50% stake in ULA as a joint venture with Boeing.
More:
https://www.cnbc.com/2020/12/21/lockheed-martins-aerojet-rocketdyne-deal-helps-compete-with-spacex.html
