A bipartisan group of 13 members of the U.S. Congress sent a letter to the Pentagon supporting Lockheed Martin’s (LMT.N) proposed acquisition of rocket engine maker Aerojet Rocketdyne (AJRD.N).
Shares of Aerojet rose more than 2% after the Reuters report as investors cheered congressional support for a deal that has run into headwinds among some lawmakers.
In July, U.S. Senator Elizabeth Warren asked the Federal Trade Commission to take a tougher look at defense industry mergers, questioning Lockheed Martin’s plan to buy the biggest independent maker of rocket motors, Aerojet Rocketdyne Holdings.
The Aug. 31 letter sent to Deputy Secretary of Defense Kathleen Hicks said it was in “both our national security interests and the U.S. taxpayer’s best interest to approve this proposed acquisition.”
The lawmakers said Northrop Grumman’s (NOC.N) 2018 purchase of rocket engine maker Orbital ATK upset the structure of the rocket engine marketplace and a Lockheed deal would restore equilibrium.
“The only reasonable assurance we have that the American rocket propulsion manufacturing sector remains strong and has at least two well-resourced merchant suppliers for all defense and space propulsion products is to approve the merger with Lockheed,” the letter said.
Lockheed announced a $4.4 billion agreement to buy Aerojet late last year, but the deal has raised eyebrows because it would give Lockheed – the No. 1 defense contractor – ownership of a vital piece of the U.S. missile industry. Aerojet motors are used in everything from the homeland missile shield to Stinger missiles.
Lockheed has said Aerojet Rocketdyne would continue to supply the entire defense industry, a premise met with skepticism by Raytheon Technologies (RTX.N), a major customer for rocket motors.
A Lockheed spokesperson said the company is expecting the deal to buy Aerojet to close by year-end.