WASHINGTON — Christopher Kubasik, CEO of L3Harris Technologies, said Jan. 27 regulators continue to review the company’s proposed $4.7 billion acquisition of Aerojet Rocketdyne and expects the merger to close in 2023.
L3Harris, headquartered in Melbourne, Florida, is a global defense and aerospace firm with more than $17 billion in annual revenue. In December it announced an agreement to buy Aerojet Rocketdyne, a California-based manufacturer of rocket engines and propulsion systems for space vehicles, ballistic missiles and military tactical weapons.
During a fourth-quarter earnings call, Kubasik said the company has been answering questions from Federal Trade Commission antitrust regulators. He said L3Harris executives have met with Pentagon officials to address questions on the acquisition of Aerojet Rocketdyne and its potential impact on defense programs.
Kubasik did not comment on a recent letter sent by Sen. Elizabeth Warren (D-Mass.) to the Federal Trade Commission urging the agency to block the transaction. The FTC last year blocked Lockheed Martin’s proposed $4.4 billion bid for Aerojet Rocketdyne, arguing that the combination would give Lockheed — a major supplier of tactical missiles — the ability to “cut off other defense contractors from the critical components they need to build competing missiles.”
L3Harris said it does not expect to face these same challenges because the combination with Aerojet would be a “horizontal move” rather than a vertical integration of a missile manufacturer and a key supplier of propulsion systems.
If the acquisition is approved, Kubasik said, there are no plans to close major facilities but he estimates about $50 million in overhead cost savings during the first year. “We both have offices in D.C. We both have offices in Huntsville. There’s some low hanging fruit there,” he said.
This would be L3Harris’ second of two back-to-back acquisitions. Earlier this month the company closed a nearly $2 billion purchase of Viasat’s tactical data links business.
“We got TDL done in 92 days, and the integration is already underway, so we can focus on getting Aerojet Rocketdyne approved, and then start the integration,” said Kubasik.
“I don’t foresee us doing any acquisitions for a couple of years, as you would imagine,” he told analysts. “There’s some non-core assets that we’re going to sell, and we’re going to use those proceeds to bring down our debt over the next few years.”