Raytheon to challenge Lockheed-Aerojet merger, CEO says

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Joe Gould
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WASHINGTON ― Raytheon Technologies plans to challenge Lockheed Martin’s proposed $4.4 billion takeover of Aerojet Rocketdyne with the U.S. government, CEO Greg Hayes said Wednesday.

“They are a huge supplier to us, and if that merger actually happens, you don’t have an independent supplier on the solid-rocket-motor side. And also, I think it gives us pause as we think about the competitive landscape going forward,” Hayes said at the Barclays Industrial Select virtual conference.

If the deal is completed, Raytheon and Boeing would see a top competitor absorb a key supplier of solid rocket motors used in Raytheon’s missile systems. Hayes said the company would make its concerns known to the Defense Department and the Department of Justice.

Raytheon had already been quietly lobbying to block the merger amid concerns it would stifle competition in the missile market, according to industry officials. The firm already has had several meetings with the Federal Trade Commission to voice its concerns.

Lockheed and Aerojet announced their deal in December, meant to beef up Lockheed’s technical know-how in the areas of space, propulsion and munitions. Aerojet’s business relies on selling propulsion systems and collaborating with other firms, some of which compete for the same business as Lockheed.

A decision on the merger is seen as a test for the new Biden administration, which was still installing the officials at the Pentagon and Federal Trade Commission who would oversee the mega deal.

Lockheed has suggested Northrop Grumman’s acquisition of solid-fuel rocket motor manufacturer Orbital ATK in 2018 would be a regulatory model, wherein Northrop was ordered to wall off its solid rocket motors business and make them available to all competitors for missile contracts.

However, opponents of the Lockheed-Aerojet deal see a cautionary tale there, after the Air Force’s sole-source, $85 billion award to Northrop to build the Ground Based Strategic Deterrent. In that case, Boeing declined to bid on GBSD, a next-generation intercontinental ballistic missile, because it claimed Northrop’s merger with Orbital gave Northrop an unfair advantage.

The merger could have implications for the Missile Defense Agency’s solicitation to build the Next-Generation Interceptor, meant to counter future North Korean intercontinental ballistic missiles and cost $4.9 billion over five years. A Raytheon-Northrop Grumman team, a Boeing-General Atomics-Aerojet team and a Lockheed-Aerojet team have announced that they would compete for the program.

Valerie Insinna contributed to this report.

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