Bipartisan group of lawmakers presses DoD to back Lockheed-Aerojet merger
WASHINGTON — A group of 13 members of Congress in a letter argue that DoD should support Lockheed Martin’s proposed $4.4 billion acquisition of rocket engine manufacturer Aerojet Rocketdyne.
The Aug. 31 letter to Deputy Defense Secretary Kathleen Hicks was signed by nine Republican and four Democratic House members from Arkansas, Alabama, Oklahoma, Texas, California and Colorado — states where Lockheed Martin and Aerojet Rocketdyne currently operate.
The letter, a copy of which was obtained by SpaceNews, says the proposed acquisition “is necessary to ensure that our defense industrial base is on the strongest footing possible to enable the continued research, development and manufacture of leading-edge rocket propulsion.”
The latest missive from lawmakers comes amid speculation that the sale of Aerojet to Lockheed Martin will be challenged by antitrust regulators.
In an Aug. 6 letter, Federal Trade Commission Chair Lina Khan expressed concerns about vertical mergers where corporations seeks to acquire a major supplier.
The FTC and the Department of Justice are currently reviewing the merger and could move to block the transaction if they determine that the combination of companies substantially lessens competition or creates a monopoly. DoD also weighs in on the national security implications of the acquisition.
The 13 lawmakers make the case that DoD will need more advanced rocket engines to combat threats like tactical and strategic missiles developed by rival nations. Aerojet would have more resources and therefore be in a stronger position to provide next-generation technologies under Lockheed Martin than as a independent company, the letter argues.
“Aerojet Rocketdyne is the last standalone rocket propulsion manufacturer of any appreciable size,” the lawmakers point out.
They echo arguments made by Lockheed Martin that this deal should follow the same template as Northrop Grumman’s acquisition in 2018 of solid rocket motors manufacturer Orbital ATK.
The Northrop-Orbital deal was approved by regulators on condition that the company implement “behavioral remedies.” In that case, Northrop had to commit to supplying motors to its competitors.
Aerojet’s main rocket propulsion competitor Orbital ATK was acquired by Northrop Grumman, the letter points out. “The U.S. government has supported the development of vertically integrated primes in the space sector.” Allowing the Lockheed-Aerojet merger “will restore competitive balance to the rocket propulsion marketplace.”
The same competitive safeguards that the FTC put in place for the Northrop Grumman-Orbital ATK combination can be used in this case, the letter adds.
The letter was signed by Reps. Steve Womack (R-Ark.), French Hill (R-Ark.), Bruce Westerman (R-Ark.), Rick Crawford (R-Ark.), Robert Aderholt (R-Ala.), Tom Cole (R-Okla.), Stephanie Bice (R-Okla.), Doug Lamborn (R-Colo.), John Carter (R-Texas), Marc Veasey (D-Texas), Julia Brownley (D-Calif.), Brad Sherman (D-Calif.) and Tony Cardenas (D-Calif.)