The Federal Trade Commission appears to be wrapping up its analysis of Lockheed Martin’s proposed merger with Aerojet Rocketdyne. Every merger is unique, but this transaction may be more unusual than most given the players and products involved. Here are five considerations that will likely shape how the FTC assesses the proposed combination. (1) Defense is not like a commercial business, it is a monopsony market, so the opinion of the military customer matters. (2) Integration, both horizontal and vertical, has been a persistent trend in the rocket-motor sector since the Cold War ended due to changing demand. (3) The proposed merger could strengthen competition in the sector given Aerojet’s modest resources for dealing with a much bigger rival. (4) The competitive landscape in the sector at present is not level and tends to work against Aerojet’s ability to remain viable. (5) A Lockheed-Aerojet merger with rigorously enforced restrictions may be the best option available for sustaining competition across all segments of the sector. I have written a commentary for Forbes here.
Find Archived Articles: