By Dhirendra Tripathi
Investing.com – Lockheed Martin stock (NYSE:LMT) traded 0.9% higher in premarket Monday after it scrapped plans to buy Aerojet Rocketdyne (NYSE:AJRD), bowing to pressure from antitrust regulators who had sued to prevent the $4.4 billion deal.
The two companies had agreed to combine in December 2020, but the Federal Trade Commission and other agencies believed the merger would hinder competition. Lockheed said the decision to drop the deal is in the wider interest of its shareholders. Rocketdyne stock fell 2%.
Handing over Rocketdyne, the only large, independent U.S. manufacturer of engines for rockets and missiles, to Lockheed, could deny other contractors access to critical parts for making competing products, the FTC argued. The two companies had said there would be no disturbance in supplies of components to rivals but the FTC took a dim view of the deal, given the national security concerns.
“We stand by our long heritage as a merchant supplier and trusted partner and will continue to support Aerojet Rocketdyne and other essential suppliers in the defense industrial base still overcoming the challenges of the pandemic,” Lockheed Martin Chairman, President and CEO James Taiclet said in a statement.
This is the second major deal in within a month that the FTC has helped to scupper, the other being Nvidia’s proposal to buy chip designer Arm. The FTC had sued against that deal too, fearing excessive concentration of critical semiconductor technology.