Raytheon to Challenge Lockheed’s $4.4 Billion Aerojet Buyout

(Bloomberg) -- Raytheon Technologies Corp. plans to contest Lockheed Martin Corp.’s takeover of Aerojet Rocketdyne Holdings Inc., a key supplier of rocket engines.

“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,” Raytheon Chief Executive Officer Greg Hayes said Wednesday at the Barclays Industrial Select virtual conference.

The proposed $4.4 billion deal would have a top competitor absorb a key supplier of solid rocket motors used in Raytheon’s missile systems. Hayes said the company would relay its concerns about the deal to the U.S. antitrust authorities and the Defense Department.

Lockheed announced the acquisition in December in an effort to expand expand its foray into missile defense and futuristic space travel, targeting higher sales and cost savings as defense budgets tighten.

Aerojet’s relationship with Raytheon gives the aerospace and defense giant reason to push back, said Bloomberg Intelligence analyst Doug Rothacker.

“Any risk to pricing or supply-chain competition raises flags for their competitiveness and affordability,” he said.

Analysts have said the proposed merger would test the Pentagon’s willingness under President Joe Biden to allow more consolidation among major suppliers. It also would squeeze Raytheon and Boeing Co., which rely on Aerojet’s rocket motors for missiles and space products, according to analysts.

Boeing declined to comment.

Lockheed and Aerojet last month sought U.S. antitrust approval for the merger, and the Federal Trade Commission is reviewing the deal, according to an Aerojet regulatory filing.

Lockheed has said it expects to close the purchase in the second half, subject to regulatory review and approval by Aerojet shareholders.

Aerojet was little changed at $52.26 at 11:04 a.m. in New York. Through Tuesday, the stock had climbed 24% since the deal was announced in December. Lockheed rose less than 1% to $337.58 Wednesday, while Raytheon fell less than 1% to $72.25.

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