Defense firm L3Harris to buy Aerojet for $4.7 bln with eye on missile demand

The logo and ticker for L3Harris are displayed on a screen on the floor of the NYSE in New York
The logo and ticker for L3Harris are displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 1, 2019. REUTERS/Brendan McDermid

Dec 19 (Reuters) - (This Dec. 18 story has been corrected to fix the premium percentage to 5.7%, not 6.5%, in the third paragraph)

U.S. defense contractor L3Harris Technologies Inc (LHX.N) said on Sunday it would buy Aerojet Rocketdyne Holdings Inc (AJRD.N) for $4.7 billion in cash as it looks to tap into rising demand for missiles amid the Ukraine conflict.

Reuters first reported on Saturday that L3Harris was nearing the deal to acquire Aerojet.

The offer price of $58 per share represents a premium of 5.7% to Aerojet's close on Friday.

The deal, expected to be completed in 2023, would create a new segment within L3Harris that would report directly to the company's chief executive.

Shares of L3Harris were down 3.8% in afternoon trade on Monday, while those of Aerojet were up 1.5%.

Reuters reported last month that L3Harris, formed by the merger of L3 Technologies and Harris Corp in 2019, was among the companies vying to buy Aerojet, which put itself up for sale after antitrust regulators blocked a merger with Lockheed Martin Corp (LMT.N) earlier this year.

The United States has assisted Ukraine with billions of dollars in military aid, including missiles and air defense systems, driving up demand for missiles as allies also seek to boost their defenses.

Aerojet develops and manufactures liquid and solid rocket propulsion and hypersonic engines for space, defense, civil and commercial applications.

The market for rockets has also received a leg up from the National Aeronautics and Space Administration (NASA), one of Aerojet's main customers, which is pursuing moon and deep space missions with renewed vigor.

Aerojet makes the RS-25 engines for NASA's launch vehicle, as well as the RL10 engines that power launch vehicles made by United Launch Alliance, a joint venture between Boeing Co (BA.N) and Lockheed Martin.

L3Harris, which has been investing in the space and cyber industries, is looking to solidify its position among top aerospace and defense firms as one of the leading contractors to the Pentagon.

Reporting by Nathan Gomes and Kanjyik Ghosh in Bengaluru; Editing by Rashmi Aich and Shounak Dasgupta

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