Aerojet keeps eye out for future opportunities following end of Lockheed merger deal

By Briana Reilly / March 16, 2022 at 10:17 AM

Aerojet Rocketdyne executives are "still very active in looking at strategic alternatives" following the termination of the company's planned sale to Lockheed Martin earlier this year, Aerojet's chief financial officer said today.

Still, Dan Boehle declined to discuss details of potential future mergers and acquisitions, noting only that the company’s executives are “always working” with their advisers and bankers to assess opportunities “as an acquirer, acquiree” as well as prioritizing shareholder returns.

“We did do the special dividend in the past as well following the Lockheed merger agreement,” he noted during this week’s J.P. Morgan Industrials Conference, referencing the payments made in connection with the previously planned $4.4 billion acquisition deal. “There are other opportunities that we’re always looking at and we’re open to anything that’s going to return value to our shareholders.”

Lockheed opted to cancel the merger in mid-February after the Federal Trade Commission sued to block the deal. Aerojet makes advanced missile propulsion systems and supplies them to prime contractors, and the FTC in announcing the lawsuit expressed concern the partnership could give Lockheed “control over critical propulsion inputs that its rivals require to compete.”

Asked today whether Aerojet is looking at broader opportunities or specific targets, such as bolt-on acquisitions that would bring the company technologies in areas like hypersonics, Boehle said executives are “looking at either, either and all,” though he declined to comment further.

With the failure of the Lockheed-Aerojet agreement, Aerojet’s leaders have divided, leaving the board in a deadlock over the company’s future, according to recent media reports. CEO Eileen Drake and Executive Chair Warren Lichtenstein are leading the separate factions, and the infighting has resulted in separate lawsuits before a Delaware judge.

A recent court ruling has left the company under a temporary restraining order, Boehle noted today, meaning he has “to remain neutral and can’t recommend or discuss any of my opinions of the differences between the factions here.”

“We’ll let that play out,” he added. “My only desire is let’s get to a shareholder vote and let that play out so that I can see who my board leadership is, but [there’s] nothing more I can say on that.”

Going forward, Boehle said he hoped to have a higher profile with investors, though he didn’t commit to holding quarterly earnings calls. He added the company is planning to hold an investor day at its Los Angeles location, though he didn’t commit to a date or time.

“I think we’ve done that once with my predecessor, Paul,” he said, referencing Paul Lundstrom, who Boehle succeeded as CFO in summer 2020. “We’d like to do that again. That site shows well and we’ve just expanded it. So, we’d like to get some folks out to take a look at that, probably in the near-term.”

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