US defense firm L3Harris Technologies Inc (LHX) said over the weekend that it would acquire Aerojet Rocketdyne Holdings Inc (AJRD) in a $4.7 billion all-cash deal, as demand for missiles surges amid continuing military conflict in Ukraine.
The acquisition is expected to be finalized next year and will add on to L3Harris’ Space & Airborne Systems division.
The $58 per share offer price is a 6.5% premium to Aerojet’s closing price on Friday.
Aerojet, which develops and manufactures liquid and solid rocket propulsion and hypersonic engines for space, defense, civil and commercial applications, put itself up for sale after a merger with Lockheed Martin Corp was blocked by antitrust regulators earlier in 2022.
Aerojet also manufactures the RS-25 engines for NASA’s launch vehicle, along with the RL10 engines powering launch vehicles made by United Launch Alliance.
The shares of Aerojet Rocketdyne Holdings Inc (AJRD) closed 0.79% ($0.43) higher at $54.89 in New York on Friday, with the company’s total market capitalization now standing at $4.42 billion.
Meanwhile, the shares of L3Harris Technologies Inc (LHX) closed 1.48% ($3.21) lower at $213.27 on the NYSE on Friday, with the defense contractor’s total market cap now standing at $40.61 billion.
The shares of L3Harris Technologies Inc have risen 0.01% so far in 2022 compared with a 19.17% loss for the benchmark index, S&P 500 (SPX).
Analyst stock price forecast and recommendation
According to TipRanks, at least 8 out of 15 surveyed investment analysts had rated L3Harris Technologies Inc’s stock as “Buy”, while 7 – as “Hold”. The median price target on the stock stands at $272.33.
All 2 surveyed Wall Street analysts had rated Aerojet Rocketdyne Holdings Inc’s stock as “Buy”. The median price target stands at $58.00.