By David Carnevali and Mike Stone
(Reuters) - L3Harris Technologies (NYSE:LHX) Inc is nearing a $4.7 billion deal to acquire U.S. rocket maker Aerojet Rocketdyne Holdings (NYSE:AJRD) Inc, 10 months after the latter's $4.4 billion sale to Lockheed Martin Corp (NYSE:LMT) fell through, people familiar with the matter said on Saturday.
Lockheed Martin walked away from its deal with Aerojet in February after antitrust regulators sued to block it, arguing that allowing the El Segundo, California-based company to be taken over by its biggest customer would have severely disadvantaged Lockheed Martin's rivals.
L3Harris is a defense contractor that is mostly a competitor rather than a customer of Aerojet. Aerojet's solid fuel rocket motors and other propulsion systems would help L3Harris expand its space defense systems and precision munitions businesses.
L3Harris outbid General Electric (NYSE:GE) Co in the final stages of a sale process for Aerojet with a $58-per-share offer, one of the sources said. An agreement could be announced as early as Monday, the sources added.
The sources requested anonymity because the matter is confidential. Spokespeople for Aerojet, L3Harris and General Electric did not immediately respond to requests for comment.
The deal represents a 28% premium to Aerojet's share price on Oct. 24., the last trading day before Reuters reported that the company was exploring a sale.
Aerojet is the biggest maker of propulsion systems in the U.S. defense industry left as an independent company after Northrop Grumman Corp (NYSE:NOC) acquired Orbital ATK Inc in 2018 for $9.2 billion.
The company develops and manufactures liquid and solid fuel rocket motors and hypersonic engines for space, defense, civil and commercial applications. Its customers include the Pentagon, Boeing (NYSE:BA), Lockheed Martin and Raytheon Technologies (NYSE:RTX) Corp.
L3Harris is itself the product of industry consolidation, created in 2019 through the merger of L3 Technologies and Harris Corp, which were looking for scale as they sought to become bigger Pentagon suppliers. The company has since been growing through acquisitions, most recently with a deal in October to buy Viasat Inc's tactical data business for $1.96 billion.
Jefferies analysts wrote in a note earlier this month after Reuters reported that L3 Harris was one of the bidders vying for Aerojet that the latter offered complementary programs across key growth areas that would account for 15% of L3Harris' sales. "Overlap is more complementary than vertical, limiting regulatory risk," the Jefferies analysts wrote.