L3Harris Technologies announced a $1 billion convertible‑preferred investment from the U.S. Department of Defense that will convert into common equity when the company spins off its Missile Solutions business into a separate, publicly traded entity in the second half of 2026.
The investment is earmarked for expanding the company’s solid‑rocket‑motor capabilities, which power key U.S. and allied missile programs such as PAC‑3, THAAD, Tomahawk, and Standard Missile. The missile‑solutions unit also incorporates assets acquired from Aerojet Rocketdyne in 2023, giving the new company a broad portfolio of propulsion technologies.
The spin‑off will create a standalone missile‑solutions company while L3Harris retains a majority or controlling interest. The deal is part of the Department of Defense’s “Go Direct to Supplier” initiative, designed to give the government a direct equity stake in critical defense suppliers and to strengthen the domestic supply chain for solid‑rocket motors.
J.P. Morgan Securities LLC is acting as the financial advisor for the transaction, and Vinson & Elkins LLP is serving as legal counsel. L3Harris will discuss the investment and spin‑off details in its Q4 earnings call scheduled for January 29, 2026.
Analysts have expressed optimism about the strategic value of the investment and the potential for a higher valuation for the newly formed missile‑solutions company. The announcement is expected to unlock shareholder value and reinforce L3Harris’s position as a key supplier of missile propulsion technology.
The move positions L3Harris to capitalize on growing demand for missile systems, supports the U.S. defense industrial base, and could lead to a higher valuation multiple for the standalone entity compared to its embedded value within the diversified contractor. The investment also signals the Department of Defense’s commitment to securing critical supply chains for future conflicts.
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