Following a lawsuit to stop Lockheed Martin Corp’s acquisition of the last independent U.S. missile propulsion supplier, the defense contractor has terminated the $4.4 billion deal, the Maryland-based aircraft maker announced Sunday (Feb. 13).
Last month, Lockheed said it planned to purchase Aerojet Rocketdyne Holdings Inc., the California-based manufacturer of rocket, hypersonic, and electric propulsive systems for space and defense applications.
Read more: FTC Seeks to Block $4.4B Lockheed Martin-Aerojet Rocketdyne Deal
Later, the Federal Trade Commission (FTC) filed a federal lawsuit against Lockheed. It alleged that if the deal closed, Lockheed would use its control of Aerojet to hurt competing defense contractors and consolidate multiple markets critical to nation’s security and defense.
“Lockheed is one of a few missile middlemen the U.S. military relies on to supply vital weapons that keep our country safe,” said FTC Bureau of Competition Director Holly Vedova in a statement at the time. “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.”
Lockheed Martin CEO James Taiclet said the planned acquisition of Aerojet Rocketdyne would have benefitted the industry through greater efficiency, speed, and significant cost reductions for the U.S. government. But the company determined that given the FTC’s actions, ending the transaction is in the best interest of stakeholders.
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“Moving forward, we will maintain our focus on the most effective use of capital with the highest return on investment, including our ongoing commitment to return value to shareholders,” Taiclet said in a statement. “We remain confident in our company’s strong foundation and growth potential as several exciting projects enter production.”
The suit represented the first challenge to a defense contractor merger in decades, the FTC said. Lockheed is one of several missile competitors under contract with the Department of Defense. The others include Raytheon Technologies, Northrop Grumman Corp., and Boeing Co.
