Sen. Elizabeth Warren and some other lawmakers are calling on the Department of Defense to block the proposed $4.7 billion sale of Aerojet Rocketdyne Holdings Inc. to L3Harris Technologies Inc.
A 2020 presidential candidate and Massachusetts Democrat, Warren sent a letter to Defense Secretary Lloyd Austin saying the merger would reduce competition and innovation in the defense industry, according to reports by Reuters and The Wall Street Journal.
"Lockheed Martin, Raytheon and Boeing are all dependent on products that only Aerojet is able to produce, and their operations could be hamstrung by its acquisition," wrote Warren, in a letter also signed by Reps. John Garamendi (D-Walnut Grove), Chris Deluzio (D-Pennsylvania) and Mark Pocan (D-Wisconsin), according to Reuters.
Aerojet Rocketdyne (NYSE: AJRD) for years was based in Rancho Cordova, where it still owns about 11,000 acres of land, but the company moved its headquarters to El Segundo in 2016 and all its manufacturing operations out of the area in 2019.
Melbourne, Florida-based L3Harris Technologies (NYSE: LHX) announced in December that it agreed to pay $58 per share in an all-cash transaction to buy Aerojet.
Aerojet specializes in rocket and missile propulsion systems of both liquid and solid varieties. Its propulsion is used on everything from massive NASA space launch engines to handheld weapons systems like the Javelin and Stinger missiles. Javelin and Stinger systems are being used extensively by Ukraine in its war with Russia.
The Javelin is made by Raytheon Technologies Corp. and Lockheed Martin Corp. and Stingers are made by Raytheon (NYSE: RTX).
The L3Harris transaction is now under review by the Federal Trade Commission, with input from the Pentagon.
Warren’s letter comes after years of consolidation in the defense industry, which now has companies struggling to produce weapons fast enough to supply demand as they are being used up in Ukraine.
Rep. Rob Wittman, a Virginia Republican and House Armed Services Committee vice chairman, has urged the Pentagon to support the merger. L3Harris executives have said that the deal won't harm competition because L3Harris doesn't make missiles and is committed to selling Aerojet products to other companies, The Wall Street Journal reported.
Aerojet’s last suitor failed to close a deal.
In 2020, Lockheed Martin (NYSE: LMT) tried to buy Aerojet for $4.4 billion. It abandoned the deal when the FTC sued to block the sale in January 2022, claiming the acquisition would give Lockheed an unfair ability to deny other defense contractors access to Aerojet components needed to build competing missiles.
Those specific systems were primarily high-speed divert and attitude control systems that allow missiles to steer toward and intercept other high-speed missiles. Lockheed was one of Aerojet’s primary customers for interceptor rocket divert technology, but not the only one.
L3Harris doesn’t build interceptor rockets.
The only remaining active division of Aerojet locally is land subsidiary Easton Development Co. LLC, which is working to develop and sell about half of the land it owns between Folsom and Rancho Cordova. The other half of the property, roughly the southern part, is a former Superfund site and is still undergoing environmental remediation for soil and groundwater contamination from the time when Aerojet tested and built rockets and missiles for the Cold War and Space Race in Sacramento.
