Lockheed Martin shares close lower on Monday, company to acquire Aerojet Rocketdyne for $4.4 billion

Lockheed Martin Corp (LMT) said over the weekend that it would acquire US rocket engine maker Aerojet Rocketdyne Holdings Inc in a deal valued at $4.4 billion, including debt and net cash.

The deal is expected to be finalized during the second half of 2021, subject to regulatory approvals.

Lockheed Martin shares closed lower for the seventh time in the past ten trading sessions in New York on Monday. The stock went down 1.88% ($6.68) to $349.35, after touching an intraday low at $346.63, or a price level not seen since October 30th ($345.65).

Shares of Lockheed Martin Corporation have retreated 10.28% so far in 2020 compared with a 14.37% gain for the benchmark index, S&P 500 (SPX).

In 2019, Lockheed Martin’s stock went up 48.71%, thus, it outperformed the S&P 500, which registered a 28.88% gain.

“Acquiring Aerojet Rocketdyne will preserve and strengthen an essential component of the domestic defense industrial base and reduce costs for our customers and the American taxpayer,” Lockheed’s Chief Executive Officer Jim Taiclet said in a statement, cited by Reuters.

The aerospace company will pay $56 per share for Aerojet Rocketdyne, while the purchase price will become $51 per share following the payment of a pre-closing special dividend, Lockheed Martin said.

“As part of Lockheed Martin, we will bring our advanced technologies together with their substantial expertise and resources to accelerate our shared purpose: enabling the defense of our nation and space exploration,” Aerojet’s Chief Executive Officer Eileen Drake said in a statement.

Analyst stock price forecast and recommendation

According to CNN Money, the 19 analysts, offering 12-month forecasts regarding Lockheed Martin’s stock price, have a median target of $420.00, with a high estimate of $509.00 and a low estimate of $390.00. The median estimate represents a 20.22% upside compared to the closing price of $349.35 on December 21st.

The same media also reported that at least 11 out of 22 surveyed investment analysts had rated Lockheed Martin Corporation’s stock as “Buy”, while 9 – as “Hold”.