US antitrust regulators have sued to block a proposed acquisition by Lockheed Martin, the world’s largest defence contractor, of missile propulsion supplier Aerojet Rocketdyne in their first litigation challenging a defence merger in decades.
The US Federal Trade Commission on Tuesday said the $4.4bn tie-up would eliminate the last independent US supplier of missile propulsion systems. If the transaction goes ahead, Lockheed would “harm rival defense contractors and further consolidate multiple markets critical to national security and defense,” the FTC said in a statement.
Holly Vedova, director of the FTC’s competition bureau, said: “Lockheed is one of a few missile middlemen the US military relies on to supply vital weapons that keep our country safe . . . Without competitive pressure, Lockheed can jack up the price the US government has to pay, while delivering lower quality and less innovation.”
“We cannot afford to allow further concentration in markets critical to our national security and defense,” she said.
The FTC will seek an injunction to block the transaction pending an administrative trial that is due to start on June 16.
Lockheed Martin said it was reviewing the complaint and would respond in due course. In a statement published ahead of the FTC’s move, Aerojet Rocketdyne said it “continues to believe in the benefits of the transaction for the United States and its allies, the industry, and all of the company’s stakeholders”.
If the regulator sued to halt the deal, Lockheed Martin could defend the lawsuit or end the merger agreement, Aerojet Rocketdyne said.
