Lockheed Martin Corp. announced on Sunday it will terminate its agreement to acquire Aerojet Rocketdyne Holdings Inc. in a deal valued at $4.4 billion.
The decision came because the Federal Trade Commission filed a lawsuit at the end of January seeking a preliminary injunction to block the deal between Aerojet Rocketdyne in El Segundo and Bethesda, Md.-based Lockheed, the company said in a release.
Aerojet has a rocket engine manufacturing site in Chatsworth where it is currently building the RS-25 engine for NASA’s Space Launch System rocket to take humans back to the Moon and on deep space missions. Lockheed owns the Skunk Works facility in Palmdale, where it handles classified contracts with the U.S. military.
Lockheed Chief Executive James Taiclet said that the company’s planned acquisition of Aerojet Rocketdyne would have benefitted the entire defense industry through greater efficiency, speed and cost reductions for the U.S. government.
“However, we determined that in light of the FTC’s actions, terminating the transaction is in the best interest of our stakeholders,” Taiclet said in a statement. “We stand by our long heritage as a merchant supplier and trusted partner and will continue to support Aerojet Rocketdyne and other essential suppliers in the Defense Industrial Base still overcoming the challenges of the pandemic.”
In a statement released Sunday, Aerojet said that it was poised to deliver substantial value to its shareholders driven by continued leadership in key space exploration and defense growth markets.
“We are confident in our future performance with an impressive backlog that is more than three times the size of our annual sales and a strong macroeconomic environment underpinning our portfolio,” the company said in its statement.
The transaction was originally announced in December 2020 and was expected to close in the second half of last year. The FTC, however, sued to prevent the deal from taking place.
“If permitted, the proposed acquisition would allow the combined firm to use its control of Aerojet to harm Lockheed’s rivals in ways that would substantially lessen competition in multiple markets for products critical to the national defense,” according to the FTC complaint filed Jan. 25.
The complaint alleges that post-acquisition, the combined firm would have been incentivized to allocate Aerojet investment dollars for the combined firm’s benefit alone, which would stifle innovation, according to a release from the FTC.