L3Harris Technologies has announced the sale of a majority stake in its civilian space propulsion unit to private equity firm AE Industrial Partners for approximately $845 million. This transaction underscores L3Harris’s strategic shift towards the military space sector, aligning its operations with the objectives of the Department of War (DoW).
In a statement released on March 15, 2024, L3Harris Chairman and CEO Christopher Kubasik emphasized the company’s commitment to enhancing the defense industrial base. He stated, “L3Harris is strongly committed to the DoW’s vision for a faster, more agile defense industrial base while remaining laser-focused on driving value for our shareholders and customers.” By divesting a 60 percent stake in the space propulsion business, L3Harris aims to further align its portfolio with defense priorities.
The sale allows L3Harris to retain a 40 percent ownership in the propulsion unit, which is known for its advanced technologies supporting NASA and other civil space initiatives. Notable products include nuclear power systems designed for future lunar and Martian missions and the RL10 engine, which powers the upper stage of the United Launch Alliance’s Vulcan heavy lift rocket. It’s important to note that the RS-25 rocket engine, integral to NASA’s Space Launch System for the Artemis program, is not part of this transaction.
AE Industrial Partners has a history of investing in the commercial space sector, with previous investments in companies such as York Space Systems, Redwire, and Firefly. The newly formed entity from this acquisition will be named Rocketdyne, paying homage to its legacy in space propulsion technology. Kirk Konert, managing partner at AE Industrial, remarked, “Rocketdyne is more than just a company; it is the birthplace of U.S. rocket propulsion.” He expressed confidence that the acquisition will rejuvenate this historic brand, creating a hybrid model that merges the stability of national defense with the innovation of private investment.
Konert highlighted the company’s plans to modernize the production of the RL10 engine by applying contemporary manufacturing practices. This approach aims to enhance efficiency and adapt to the evolving demands of both civil and military space operations.
L3Harris’s decision to pivot towards military-focused initiatives reflects broader trends in the aerospace and defense industries, where increasing competition and technological advancements drive companies to adapt their business strategies. By concentrating on defense capabilities, L3Harris positions itself to meet the growing needs of military clients while continuing to support essential civil projects through its retained stake in Rocketdyne.
As the landscape of space exploration and defense continues to evolve, L3Harris’s strategic decisions will play a critical role in shaping its future and the broader industry’s response to emerging challenges and opportunities.
