L3Harris sells majority stake of space propulsion biz for $845M
L3Harris Technologies (LHX) announced on Monday that it is selling a majority stake of its space propulsion and power systems business to private equity firm AE Industrial Partners for $845 million, including debt.
The Florida-based company will retain a 40% ownership stake of the new space technology business with AE industrial. It noted that its RS-25 rocket engine business is excluded from the transaction.
The deal is expected to close in the second half of this year, pending regulatory approvals and other closing conditions.
L3Harris cited its growing focus on opportunities in the defense sector as a reason for selling off the majority stake of its space propulsion business.
“L3Harris is strongly committed to the Department of War’s (DoW) vision for a faster, more agile defense industrial base while remaining laser-focused on driving value for our shareholders and customers,” L3Harris chairman and CEO Christopher Kubasik said in a statement. “This transaction further aligns the L3Harris portfolio with DoW core mission priorities.”
Shares of LHX gained 2.1% on news of the transaction.
In addition to the deal with AE Industrial, L3Harris on Monday also revealed that it was reorganizing its company into three business units: Space & Mission Systems (SMS), Communications & Spectrum Dominance (CSD) and Missile Solutions (MSL).
All three will be focused on developing products and services aimed at the defense sector.
SMS will integrate satellite and payload capabilities, including missile warning and defense, with maritime, air special missions, and other global defense and civil government programs. CSD will combine resilient communications and warfare, while MSL will bring together propulsion, hypersonic and other advanced missile technologies.
“Enabling the Arsenal of Freedom requires action, and we’re now best poised to deliver the speed, technology and commerciality required by our most important customer – the warfighter," Kubasik said.
L3Harris and Joby Aviation (JOBY) announced a partnership in August to co-develop a new gas turbine hybrid vertical takeoff and landing (VTOL) aircraft that Joby called “a new aircraft class for defense applications.”
The partnership is combining Joby's track record in VTOL aircraft manufacturing with L3Harris' expertise in mission systems, including sensors, effectors, communications, and collaborative autonomy
The hybrid VTOL is designed for low-altitude missions and can operate either fully crewed or autonomously. The companies expect to launch operational demonstrations of the VTOL sometime in 2026.
Meanwhile, AE Industrial, which is focused on investments within the aerospace industry, said that its partnership with L3Harris will accelerate the development of future propulsion technologies, including nuclear propulsion. Nuclear propulsion is seen as being critical to the exploration of Mars.
“This transaction will not only modernize and give new life to a pioneer of space and national defense technology, but it will also create a new hybrid model of agile collaboration, combining the stability and power of a national defense prime with the innovation of a specialized investor,” Kirk Konert, managing partner at AE Industrial, said in a statement.