Aerojet Rocketdyne, which L3Harris Technologies seeks to acquire, tests a thrust chamber assembly for an RL-10 rocket engine. (US Air Force)
L3Harris Technologies expects to raise about USD1 billion by divesting two or three non-core businesses, according to the head of the US defence contractor.
The proceeds will help pay for L3Harris' proposed USD4.7 billion acquisition of propulsion manufacturer Aerojet Rocketdyne, L3Harris chair and CEO Chris Kubasik told analysts during a 28 April earnings call. L3Harris is reviewing potential divestiture candidates and hopes to “sign and announce something” in 2023, Kubasik said.
“We'll run a process,” he added. “We get a lot of inbound calls, especially after something like this, where I say what I just said.”
Kubasik expressed confidence that the Aerojet Rocketdyne deal will receive regulatory approval in the second half of 2023, saying the combination does not raise the kinds of anti-trust concerns that doomed Lockheed Martin's attempted takeover of Aerojet Rocketdyne. “We are not a customer of [Aerojet Rocketdyne], and they are not a customer of ours,” he said.
The US Federal Trade Commission (FTC) opposed Lockheed Martin's bid, arguing it would have reduced competition in the missile market because Lockheed Martin manufactures missiles, and Aerojet Rocketdyne is the last independent provider of missile propulsion. L3Harris is not a major player in missiles.
L3Harris Technologies revealed in mid-March that it received a second information request about its Aerojet Rocketdyne bid from the FTC, which is reviewing the deal. Kubasik said L3Harris is collecting data to fulfil the request and expects to submit its response in June.
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