Salem Radio Network News Tuesday, July 5, 2022

Business

Lockheed Martin says it faces FTC antitrust concerns over Aerojet deal

By Mike Stone

WASHINGTON (Reuters) -The U.S. Federal Trade Commission (FTC), which assesses mergers to ensure they comply with antitrust law, has informed Lockheed Martin that its planed purchase of Aerojet Rocketdyne will raise antitrust concerns, the company said on Tuesday.

The FTC told Lockheed that “concerns regarding the transaction cannot be adequately addressed by a consent order” putting Lockheed in a position to either abandon the transaction or fight a federal lawsuit in order to close the deal.

The deal has drawn criticism because it would give Lockheed – the No. 1 defense contractor – a dominant position over a vital piece of the U.S. missile industry.

Rocket motors are used in everything from the homeland defensive missile system to Stinger missiles. Missile maker Raytheon has been an outspoken opponent of the proposed deal.

The $4.4 billion deal announced in late 2020 is Lockheed’s first large acquisition under new CEO Jim Taiclet. It would reshape the competitive landscape for solid rocket fuel missiles which are used with jets and drones.

Aerojet develops and manufactures liquid and solid rocket propulsion, air-breathing hypersonic engines, and electric power and propulsion for space, defense, civil and commercial applications. Its customers include the Pentagon, NASA, Boeing, Lockheed Martin, Raytheon Technologies, and the United Launch Alliance.

The deal has found opponents on Capitol Hill.

U.S. Senator Elizabeth Warren, who has a keen interest in corporate behavior, asked the FTC to examine the premise and efficacy of internal firewalls like those Lockheed has proposed to prevent it from gaining a competitive advantage over peers once the deal closes, according to a July 16 https://www.reuters.com/business/aerospace-defense/senator-warren-questions-lockheeds-antitrust-solution-buy-aerojet-2021-07-20 letter.

In general Warren has asked the FTC to take a tougher look at defense industry mergers.

Other senators have criticized defense industry consolidation saying it has hurt innovation and made weapons more expensive for the Department of Defense.

(Reporting by Mike Stone in Washington; editing by Chizu Nomiyama and Jason Neely)

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