A Forbes piece by Lexington COO Loren Thompson was quoted in a piece by Defense News on the recent Lockheed-Aerojet merger. The article, titled “Five Issues Washington Should Consider In Reviewing A Lockheed-Aerojet Merger,” opined that regulators should take into consideration the fragility of Aerojet in the market; that blocking the acquisition would give Northrop an unfair advantage; and that overall, the deal would reduce costs to the government.
“The way the relationship currently works, Aerojet includes a profit margin in the price it charges for its engines, and then Lockheed adds its own profit margin when it bills the government for the finished product. Under federal accounting rules, this ‘fee-on-fee’ arrangement would disappear if Aerojet became part of Lockheed,” Thompson said.
Read the full article here.
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