Lockheed Martin wants to acquire Aerojet Rocketdyne, one of only two major producers of rocket engines in the U.S. The government approved a similar merger of Northrop Grumman and Orbital ATK three years ago, so it’s hard to see what the rationale would be for stopping this latest chapter in defense-sector consolidation. Obviously, there must be an enforceable agreement that Lockheed not be able to leverage Aerojet franchises to gain unfair advantage in the marketplace. However, it’s important to understand that one way or another, Aerojet is going to be acquired: it’s too small to survive as a stand-alone enterprise. What it needs to remain viable in all its core product line is a well-resourced parent with similar culture that will enable it to withstand the slings and arrows of a volatile federal market. If the government allows the merger to go forward, it will probably save some money in the process, and maybe even bolster competition in civil space. I have written a commentary for Forbes here.
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