Strategic Restructuring Reshapes Future of Former Aerojet Rocketdyne Assets

Aerojet Rocketdyne US0078001056

A significant corporate restructuring is underway for the defense and space propulsion assets formerly operating under the Aerojet Rocketdyne banner. The moves involve a rare direct investment from the U.S. Department of Defense, a partial sale to a private equity firm, and plans for a future public listing. This strategic realignment aims to bolster the resilience of the domestic U.S. defense industrial base.

In an unconventional step, the U.S. Department of Defense (DoD) is providing $1.0 billion in the form of convertible preferred stock directly to the future Missile Solutions business. This capital infusion is designated for modernizing production facilities and expanding domestic manufacturing capacity. The primary objective is to secure the supply chain for propulsion systems critical to major defense programs, including PAC-3, THAAD, and Tomahawk missiles. This direct financial partnership between the Pentagon and a supplier is designed to establish a solid financial foundation for the unit's planned independence.

Key Financial Details:
* DoD Investment: $1.0 billion (convertible preferred stock)
* Combined Annual Revenue of Segments: $9.3 billion
* Combined Operating Profit: $1.1 billion
* Enterprise Value of Space Propulsion Unit: $845 million
* Planned IPO for Missile Solutions: Second half of 2026

A Two-Pronged Separation Strategy

Parent company L3Harris Technologies is executing a dual-path separation of these operations. The Missile Solutions division is slated to be spun off into an independent, publicly traded company. An initial public offering (IPO) is currently scheduled for the latter half of 2026. At that time, the DoD's preferred shares are expected to be converted into common stock.

Concurrently, L3Harris has sold a 60% stake in the Space Propulsion and Power Systems business to private equity firm AE Industrial Partners. This segment, which manufactures engines like the RL10, will resume operations under the historic "Rocketdyne" name. The transaction implies a total enterprise valuation of $845 million for the unit, valuing the 60% stake at approximately $507 million. L3Harris will retain a 40% ownership interest.

Industrial Implications and Forward Trajectory

These actions strategically concentrate production and capital on two distinct business models: conventional solid rocket motors and spaceflight propulsion systems. The Pentagon's direct investment provides the future Missile Solutions entity with immediate liquidity. These funds are intended to support urgent munitions replenishment and the advancement of hypersonic technology. The overarching goal is to stabilize the domestic supply chain, a critical concern given the dwindling number of large-scale suppliers for solid rocket motors.

The roadmap is now clear: an IPO for Missile Solutions in H2 2026 with conversion of the DoD's stake, the sale of 60% of the space propulsion business for an implied $507 million, and L3Harris's retention of a 40% share in that unit. These timelines and capital movements will define the next chapter for the newly configured entities.