Following the news that Aerojet Rocketdyne’s shareholders have voted to approve the Lockheed Martin acquisition;

Anthony Endresen, Aerospace and Defense Associate Analyst at GlobalData, a leading data and analytics company, offers his view on what this deal will mean for Lockheed Martin:

“If Lockheed Martin’s acquisition of Aerojet Rocketdyne is successful, the company will be well-positioned to capitalize on the maturation of key technologies such as hypersonic propulsion. The acquisition will allow Lockheed Martin to integrate the company’s technology into other programs and platforms, specifically missile systems types reaching maturity and thus fielding in the near future.

“This $4.4bn deal fits the pattern GlobalData expects to see across the aerospace, defense and security (ADS) space in 2021. Companies will be focusing on strong vertical integration to protect in this coming austere environment, while securing access to reliable streams through defense in key technology areas. The vertical integration will allow securing supply even from portions of the supply chain that are less financially viable on their own, or have inherent cash flow complications, for example.

“In the 12 months to December 2020, the value of acquisitions in the ADS sector was $18.6bn, with mergers valued at $8.7bn, according to GlobalData. The largest merger and acquisition (M&A) deal announced in 2020 was Lockheed Martin’s acquisition of Aerojet Rocketdyne Holdings for $4.4bn, subject to closing in 2021. Financial stresses for companies increased in 2020, with revenues slashed and immediate cashflow concerns taking priority over pre-COVID-19 strategies. Cashflow concerns in the supply chain also make non-prime companies more vulnerable and increasingly likely to seek integration.”