Benzinga | Dec 20, 2020 11:36PM EST

Lockheed Martin To Buy Defense Industry Supplier Aerojet In $5B Deal

Defense and aerospace company Lockheed Martin Corporation (NYSE:LMT) is set to acquire propulsion systems manufacturer Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) in a $5 billion deal, the two companies announced Sunday.

What Happened Lockheed Martin has agreed to pay Aerojet a consideration of $56 per share -- representing a 33% premium on the stock's closing price on Friday and a 42% premium on the 90-day volume-weighted average stock price.

The all-cash acquisition includes a special dividend component for Aerojet stakeholders, payable on March 24. After adjusting the $5 per share special dividend, the revised purchase price is estimated at $51 per share -- a 21% premium on Friday's closing price.

The acquisition is yet to receive regulatory and shareholder approval and the companies anticipate the deal to close sometime in the second half of next year.

Why Does It Matter "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 CEO, James D. Taiclet said in a statement.

Benefiting from synergies, the defense manufacturer can enhance multiple areas of business like the integrated air and missile defense, tactical missiles, hypersonics, strategic systems, and space exploration, as per Aerojet.

Price Action LMT stock closed 0.97% higher at $356.03 on Friday, whereas AJRD quoted $42.04 with a 0.45% gain.

Photo courtesy: Alan Wilson via Flickr