L3Harris to Sell Majority Stake in Space Propulsion Unit to AE Industrial Partners
L3Harris Technologies has announced a significant move in its space portfolio. On January 5, the company revealed plans to sell a majority stake in its space propulsion business to AE Industrial Partners, a private equity firm. This marks a pivotal moment in L3Harris' space division since its acquisition of Aerojet Rocketdyne in 2023. The deal is valued at $845 million, with AE Industrial acquiring a 60% interest in L3Harris' Space Propulsion and Power Systems unit.
The Space Propulsion and Power Systems unit is a powerhouse in the field, developing advanced rocket engines, in-space propulsion systems, and space power technologies. Its portfolio includes the RL-10 upper-stage engine, in-space electric thrusters, and power systems used in spacecraft and exploration missions. The unit also works on cutting-edge capabilities like nuclear surface and in-space power concepts. These technologies are integral to missions ranging from Mars rovers to NASA's lunar Gateway.
One notable aspect of the deal is the exclusion of the RS-25 rocket engine program, which will remain under L3Harris' ownership. The RS-25 engine is crucial for NASA's Space Launch System, powering Artemis lunar missions and carrying long-term contractual commitments. By retaining this program, L3Harris ensures its position as the prime supplier to NASA, maintaining continuity in their partnership.
L3Harris' decision to sell the space propulsion unit aligns with its broader strategic focus on defense. The company aims to refocus its efforts on core national defense priorities, particularly missile production and other defense systems. The assets being divested, including RL-10 engines and in-space propulsion technologies, are better suited for integration into a broader commercial and space-focused investment portfolio.
Christopher Kubasik, L3Harris' chairman and CEO, emphasized the company's commitment to the Department of War's vision for a faster, more agile defense industrial base while driving value for shareholders and customers. This transaction further aligns L3Harris' portfolio with the Department of War's core mission priorities.
AE Industrial, the acquiring firm, plans to revive the historic Rocketdyne brand, known for its pioneering role in U.S. rocket propulsion. AE Industrial's managing partner, Kirk Konert, expressed enthusiasm for modernizing and giving new life to this iconic brand, creating a hybrid model of agile collaboration between a national defense prime and a specialized investor.
AE Industrial's space investments already include launch provider Firefly Aerospace, space infrastructure firm Redwire Space, and satellite manufacturer York Space Systems. The partnership with L3Harris will further accelerate the development of future propulsion technologies, including nuclear propulsion, which both companies believe is essential for deep-space exploration and cislunar domain operations.
In summary, this strategic move by L3Harris reflects a shift towards defense priorities while also exploring new opportunities in the commercial space sector. The partnership with AE Industrial has the potential to revolutionize space propulsion technologies and solidify the companies' positions in the industry.
