L3Harris Technologies announced that it will sell a 60% controlling stake in its Space Propulsion and Power Systems business to private‑equity firm AE Industrial Partners for an enterprise value of $845 million, including debt. The deal values the upper‑stage rocket engine portfolio—most notably the RL‑10 engine used on United Launch Alliance’s Vulcan Centaur—at more than $500 million, while L3Harris retains a 40% minority interest in the unit.
The transaction excludes the RS‑25 engine business, which L3Harris keeps under sole ownership for NASA’s Artemis program and the Space Launch System. By divesting the propulsion unit, L3Harris can focus capital and management attention on its core defense businesses, including missile defense, electronic warfare, and the LHX NeXt transformation, while still preserving upside through its remaining stake.
AE Industrial Partners plans to revive the historic Rocketdyne name for the acquired business, underscoring the long‑standing legacy of the RL‑10 engine and the strategic fit with the firm’s existing space portfolio, which includes Firefly Aerospace and RedWire Space. The sale aligns with a broader industry trend of consolidation in the aerospace and defense sector, as private‑equity investors seek to build integrated capabilities in response to growing demand for satellite and space‑based defense systems.
L3Harris’ financial profile supports the transaction: the company has a market capitalization of roughly $56.95 billion, a gross margin of 25.65%, an operating margin of 10.61%, a debt‑to‑equity ratio of 0.6, and a current ratio of 1.14. The divestiture is expected to strengthen the balance sheet and free cash flow for future investments in high‑margin defense contracts, including the Aerojet Rocketdyne integration completed in July 2023.
Management emphasized the strategic fit of the sale. Chairman and CEO Christopher Kubasik said the transaction “further aligns the L3Harris portfolio with DoW core mission priorities” and signals a commitment to a “faster, more agile defense industrial base.” AE Industrial’s managing partner Kirk Konert highlighted the RL‑10’s heritage, noting that “reviving the Rocketdyne name honors the engine’s legacy while modernizing production.”
The market reacted positively, with L3Harris shares trading at $306.50 in pre‑market trade—up 0.66%—and the stock having climbed nearly 48% over the past year, approaching its 52‑week high of $308.12. Investors view the sale as confirmation of L3Harris’ focus on high‑margin defense products and its ability to monetize non‑core assets while maintaining exposure to a growing propulsion segment.
The divestiture also positions L3Harris to capitalize on geopolitical headwinds that are boosting demand for missile defense and space‑based capabilities, such as the Russia‑Ukraine conflict and Middle East tensions. By consolidating its propulsion expertise under a private‑equity partner, L3Harris can continue to support the U.S. space launch ecosystem while sharpening its competitive edge in defense markets.
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