U.S. antitrust regulators sued to block
Lockheed executives said they are deciding whether to fight the government’s move or rework their strategy for using Aerojet’s propulsion systems in developing hypersonic weapons -- a critical U.S. defense imperative.
“This deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles,” Holly Vedova, head of the FTC’s Bureau of Competition, said in a
The proposed acquisition is an early litmus test for President Joe Biden’s push to take a harder stance against mergers across the economy. It is the second major merger challenge brought by Federal Trade Commission Chair
On the Lockheed transaction, the FTC voted 4-0 to file a complaint in the agency’s administrative court and said it plans to seek an injunction to block the deal in federal court.
Lockheed said it would decide within the next 30 days whether to go to court or walk away from the merger.
The company and Aerojet had agreed not to close the transaction before Jan. 27 to enable discussions about “firewall commitments.” The companies had defended the tie-up as beneficial for the U.S., its allies, the industry and their own stakeholders.
Aerojet tumbled 18% at 2:22 p.m. in New York after sliding 19%, the most intraday since Jan. 22, 2020. Lockheed rose 3.3% after reporting
What Bloomberg Intelligence Says
Lockheed share repurchases may be further augmented if the Aerojet deal is abandoned. However, Lockheed could still use its strong cash generation and balance sheet for M&A, possibly with a more tech-driven focus than the Aerojet proposal.
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Lockheed’s planned acquisition was the first major strategic foray by
While it would be more efficient to have a single set of engineers focused on melding a propulsion system with a vehicle frame, “we can still manage it which ever way that deal works out,” Taiclet said during Lockheed’s
The acquisition’s demise would have limited financial impact for Lockheed since it’s not baked into the company’s financial forecasts, said
Lockheed rival Raytheon Technologies Corp.
Biden in July issued
Pentagon spokesman John Kirby told reporters that the Defense Department shared its views on the proposed merger with the commission last month but declined to disclose its recommendations.
(Updates with Bloomberg Intelligence analysis)
--With assistance from
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