Lockheed Martin Abandons Aerojet Takeover Amid FTC Lawsuit

Issue 110

Lockheed Martin has dropped its $4.4bn bid to buy the rocket engine maker Aerojet Rocketdyne after the US Federal Trade Commission sued to block the deal, claiming it would reduce competition and raise prices in the defense sector.

The collapse of the takeover is the second significant victory for the FTC in a week after SoftBank abandoned its proposed $66bn sale of UK-based chip business Arm to Nvidia in the face of resistance from the agency and other national competition regulators. Lina Khan, FTC chair, has vowed to oversee much tougher enforcement of US competition rules as part of an effort by Joe Biden’s administration to tackle concentrations of corporate power across the economy.

Based outside Washington, Lockheed is the world’s biggest defense contractor. The company had announced its agreement to acquire Aerojet in December, saying it would “preserve and strengthen an essential component of the domestic defense industrial base and reduce costs for our customers and the American taxpayer”. The plan quickly ran into resistance in Washington, however. Elizabeth Warren, Democratic Senator from Massachusetts, wrote to the FTC in objection to the deal, warning that “waves of merger activity and consolidation has transformed the nation’s defense industry from a competitive market with over 50 firms to an oligopoly of only five large rivals”.

The FTC sued to block the deal last month, calling it the agency’s first litigated challenge to a defense merger in decades. It said the US defense department had also reviewed the potential acquisition and considered its impact.

Source: Financial Times