Stock Groups

FTC likely suing to block Lockheed Martin buy

[ad_1]

The core stage for NASA’s Space Launch System rocket is equipped with four Aerojet Rocketdyne 25 engines.

NASA

Aerojet RocketdyneStock fell following the announcement by the maker of rocket engines and spacecraft propulsion that the Federal Trade Commission would attempt to stop its acquisition Lockheed Martin.

Aerojet Rocketdyne stated in a press release that “We believe it’s highly probable that the FTC votes to sue the transaction,”.

According to the company, the FTC is expected to vote on the suit before Thursday. CNBC reached out the FTC to get comment.

Aerojet Rocketdyne’s shares dropped by as much as 16% premarket trading as compared with its closing price of $45.00

This defense powerhouse is December 2020 announced its intention to buy Aerojet at a $4.6 billionValuation of equity. The transaction was originally expected to close by the end of the second quarter last year. However, the FTC reviewed the matter and delayed it until this month.

Aerojet is Aerojet’s biggest customer. It accounts for 33% of the company’s sales. United Launch Alliance, or ULA, makes up another 10% of Aerojet’s sales – a further complement to Lockheed Martin, which owns a 50% stake in ULA as a joint venture with Boeing.

Lina Khan (FTC chair) expressed concern about vertical mergers of this magnitude, such as Lockheed-Aerojet.

In a letter last year, Khan doubted that “behavioral remedies” – such as Northrop Grumman’s commitment to sell Orbital ATK rocket motors to competitors after its acquisition in 2018 – may not be “sufficient to prevent a vertical merger from causing harm.”

[ad_2]