L3Harris Technologies has taken a significant step in reshaping its business focus by selling a majority stake in its civilian space propulsion unit to the private equity firm AE Industrial Partners for approximately $845 million. This move aligns with the company’s strategy to concentrate more on the military space sector and the needs of the Department of War (DoW).
Christopher Kubasik, Chairman and CEO of L3Harris, emphasized the company’s dedication to the DoW’s vision for a more agile defense industrial base. “L3Harris is strongly committed to driving value for our shareholders and customers,” he stated. The transaction, which involves the sale of a 60 percent stake, allows L3Harris to retain a 40 percent share in the space propulsion business unit, which has been integral in developing technologies for NASA and other civil space initiatives.
Focus on Military Applications
The propulsion unit has produced key technologies, including nuclear power systems designed for future missions to the moon and Mars. Notably, it is responsible for the RL10 engine, which powers the upper stage of the United Launch Alliance’s Vulcan heavy-lifter. However, the sale does not include the RS-25 rocket engine business, which serves as the main propulsion system for NASA’s Space Launch System, intended for the Artemis missions aimed at returning humans to the moon.
AE Industrial Partners, known for prior investments in commercial space companies such as York Space Systems and Firefly, announced that the new entity will operate under the name Rocketdyne. This name pays homage to its historical significance in space propulsion technology. The original Rocketdyne was founded in 1955 as a subsidiary of North American Aviation, and L3Harris acquired Aerojet Rocketdyne in 2023, enhancing its portfolio in propulsion systems.
Kirk Konert, managing partner at AE Industrial, highlighted the historical importance of Rocketdyne. “Rocketdyne is more than just a company; it is the birthplace of U.S. rocket propulsion,” he remarked. He added that the transaction aims to modernize and revitalize this pioneer in space and national defense technology. The new entity plans to implement modern manufacturing practices to enhance production efficiency, particularly for the RL10 engine.
Strategic Directions and Future Goals
This strategic pivot reflects L3Harris’s commitment to aligning its operations with the evolving priorities of defense agencies. With the military space market gaining prominence, L3Harris sees this transaction as a way to streamline its focus on defense capabilities while also ensuring a robust return for its investors.
The partnership with AE Industrial is expected to foster an innovative environment that combines the strengths of a national defense prime with the agility of a specialized investor. As the landscape of space exploration and defense continues to evolve, the establishment of Rocketdyne could play a crucial role in advancing U.S. capabilities in space propulsion and technology.
In conclusion, L3Harris’s divestment from its civilian space propulsion unit marks a pivotal shift towards military applications, reinforcing its alignment with the Department of War’s core mission priorities. As Rocketdyne emerges as a new player in the market, industry observers will be keen to see how this collaboration develops in the coming years.
