Aerojet produces engines for missiles such as the Javelin, which is currently deployed in Ukraine.
L3Harris Technologies Inc. LHX -1.48%decrease; red down-pointing triangle announced on Sunday that it had agreed to buy Aerojet Rocketdyne Holdings Inc. AJRD 0.79%increase; green up-pointing triangle in a $4.7 billion deal that would cement L3Harris’s position as one of the Pentagon’s six prime defence contractors.
Aerojet is a significant manufacturer of missile engines, such as the Javelin used in Ukraine. Its products also help power NASA rockets and US military hypersonic systems designed to deter China’s military expansion.
According to people involved in the negotiations, L3Harris’ all-cash bid of $58 per share beat out competing bids from General Electric Co. and Textron Inc., TXT 0.39%increase; green up pointing triangle. A transaction is expected to face intense regulatory scrutiny at a time when Aerojet is also dealing with production issues.
L3Harris, based in Melbourne, Fla., is the result of a 2019 merger between L3 Technologies Inc. and Harris Corp. It has a market value of around $40 billion. The transaction created a company whose products ranged from military radios to top-secret space hardware to air-traffic control systems.
L3Harris CEO Chris Kubasik has stated that his company’s goal is to compete with major Pentagon suppliers such as Raytheon Technologies Corp. and Lockheed Martin.
L3Harris has sold training businesses to fund expansion and investment in other areas. In recent months, it has won contracts outside its usual areas of expertise, such as supplying aircraft for the United States Special Operations Command and satellites to track hypersonic missiles.