What's Happening?
L3Harris Technologies has announced the sale of a 60% stake in its propulsion business to AE Industrial Partners for $845 million. This transaction marks a significant shift in the company's operations,
as it retains a 40% interest in the business. The propulsion business, which was acquired by L3Harris in 2022 through a $4.7 billion purchase of Aerojet Rocketdyne, will now operate under the name Rocketdyne. The sale excludes the RS-25 rocket engine business, which is used in NASA's Space Launch System. AE Industrial Partners, known for its investments in the space sector, including stakes in York Space Systems and Firefly Aerospace, will take the lead in managing the propulsion business.
Why It's Important?
This sale is significant as it reflects ongoing consolidation and strategic realignment within the aerospace and defense sectors. By divesting a majority stake in its propulsion business, L3Harris is likely aiming to streamline its operations and focus on its core competencies. The move also highlights the increasing interest and investment in space technologies by private equity firms like AE Industrial Partners. This transaction could potentially lead to increased competition and innovation in the propulsion sector, as new players and investments enter the market. For L3Harris, the reorganization into three business segments—space and mission systems, communications and spectrum dominance, and missile solutions—aligns with its military commitments and the broader industry trend towards defense and military applications.
What's Next?
The sale is expected to close in the latter half of 2026, pending regulatory approvals. L3Harris will reorganize its business structure to better align with its strategic goals, with an earnings release scheduled for January 29, 2026, to reflect these changes. The propulsion business, under AEI's majority ownership, may see new developments and partnerships as it operates under the Rocketdyne name. Stakeholders in the aerospace and defense industries will be closely monitoring how this transaction impacts market dynamics and competition.
