Lockheed Martin terminates $4.4B agreement to acquire Aerojet Rocketdyne

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  • Lockheed Martin (NYSE:LMT) said it terminated its $4.4B agreement to purchase Aerojet Rocketdyne (NYSE:AJRD).
  • The decision comes after the U.S. Federal Trade Commission filed a lawsuit late last month seeking a preliminary injunction to block the acquisition, Lockheed said in a statement.
  • The FTC last month voted 4-0 to see an injunction to block the transaction on antitrust grounds, saying the "deal would give Lockheed the ability to cut off other defense contractors from the critical components they need to build competing missiles."
  • "Our planned acquisition of Aerojet Rocketdyne would have benefitted the entire industry through greater efficiency, speed, and significant cost reductions for the U.S. government," Lockheed Martin CEO James Taiclet said in a statement. "However, we determined that in light of the FTC's actions, terminating the transaction is in the best interest of our stakeholders."
  • The companies received a second request from the FTC on the combination in February. The combination raised some eyebrows because it would give no. 1 defense contractor Lockheed ownership of Aerojet, which produces 70 % of the solid fuel rocket motors and other propulsion products used in arms from antiballistic missiles to air-to-air missiles.
  • "We are confident in our future performance with an impressive backlog that is more than three times the size of our annual sales and a strong macroeconomic environment underpinning our portfolio," Aerojet said in a press release after Lockheed announced the deal termination.
  • Last week Jefferies raised its rating to buy from neutral on Aerojet, citing the standalone fundamentals of the company.
  • The "valuation pricing in a potential deal break rather than fundamentals, with a 25 % discount to the peer group," Jefferies analyst Greg Konrad wrote in a note last week. Konrad cut AJRD his price target to $47 from $49. AJRD trades at 9.4X FY21 EV/EBITDA , a 25 % discount to the group vs a 10 % historical avg discount.
  • The deal termination comes amid an apparent boardroom battle at Aerojet. Aerojet holder Steel Holdings, which includes Executive Chairman Warren Lichtenstein, earlier this month said it was nominating seven directors to the company's board, including four incumbents.

    For this year the company, based in Bethesda revenue will be around 66.01 billion USD. This is according to the average of the analysts' estimates. This is slightly lower than 2021's revenue of 67.04 billion USD.

    Historical revenues and results Lockheed Martin plus estimates 2021

    financiële analyse

    The analysts expect for 2021 a net profit of 7.13 billion USD. For this year the majority of the analysts, consulted by press agency Thomson Reuters, expects a profit per share of 26.84 USD. The PE-ratio therefore is 16.05.

    Analysts expect a dividend of 11.31 USD per share. Thus the dividend yield equals 2.63 percent. The average dividend yield of the aerospace & defense companies is a limited 0.83 percent.

    Based on the current number of shares Lockheed Martin 's market capitalization equals 120.2 billion USD. 15

    On Monday the stock closed at 430.81 USD.

    Historical stock prices Lockheed Martin

    financial analysis lockheedmartin

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