Summary
Lockheed Martin Corporation (LMT) announced on February 13, 2022, the termination of its Agreement and Plan of Merger with Aerojet Rocketdyne Holdings, Inc., initially agreed upon in December 2020. This decision follows the Federal Trade Commission's (FTC) legal action to block the proposed acquisition, which was filed in January 2022. The termination was initiated by Lockheed Martin sending a notice to Aerojet Rocketdyne, and importantly, no termination penalties were incurred by either party. The termination signifies a significant shift for Lockheed Martin's strategy concerning vertical integration within its supply chain, particularly for critical propulsion systems used in its key defense programs like PAC-3, THAAD, and Next Generation Interceptor. Aerojet Rocketdyne has been a substantial supplier, accounting for approximately 31-34% of its net sales. The termination implies that Lockheed Martin will continue to rely on external suppliers for these essential components, rather than bringing this capability in-house through acquisition.
Key Highlights
- 1Lockheed Martin has terminated its merger agreement with Aerojet Rocketdyne.
- 2The termination was a direct response to the FTC's legal challenge seeking to block the acquisition.
- 3No termination penalties were incurred by either Lockheed Martin or Aerojet Rocketdyne.
- 4Aerojet Rocketdyne is a key supplier for several of Lockheed Martin's major defense programs, including missile defense and hypersonics.
- 5Sales from Lockheed Martin represented a significant portion (31-34%) of Aerojet Rocketdyne's net sales in recent periods.
- 6The termination underscores ongoing regulatory scrutiny of consolidation within the defense industrial base.