Raytheon CEO says company will share concerns about Lockheed-Aerojet deal with government

By Marjorie Censer / February 17, 2021 at 12:39 PM

(Editor's Note: This has been updated to include comments from Lockheed Martin Chief Financial Officer Ken Possenriede.)

The chief executive of Raytheon Technologies said today the company is not pleased with Lockheed Martin's planned acquisition of Aerojet Rocketdyne and will share those worries with the Justice Department and the Pentagon.

During a virtual conference hosted by Barclays, Greg Hayes said Aerojet is a "huge supplier to us."

"If that merger actually happens, you don't have an independent supplier on the solid-rocket motor side," he said. "It also, I think, gives us pause as we think about the competitive landscape going forward."

"We're going to make our concerns known to the DOJ and the Department of Defense and just see how this whole thing plays out," Hayes added.

Lockheed, which announced the deal late last year, has dismissed concerns about Aerojet's customers, arguing Lockheed already is a supplier to many of these companies.

"We've already created a company, it's already created a reputation of being a fair player and an effective supplier to other defense primes," Jim Taiclet, Lockheed's chief executive, said last year. "We'll try to embellish and enhance that reputation."

Speaking this afternoon at the same conference, Ken Possenriede, Lockheed's chief financial officer, reemphasized that point, arguing Lockheed's ownership will make Aerojet a more reliable and affordable supplier.

"We have every intention of continuing to be a merchant supplier across our industry and we're going to continue to play fair," he said. "This is a very compelling story for Lockheed Martin and for the other primes and the ultimate customer, the United States government."

Meanwhile, Hayes also said today Raytheon will likely be more focused on divestitures than acquisitions in the near-term.

"As we think about [mergers and acquisitions] for the next couple of years . . . I don't see any big strategic hole that we need to fill with an acquisition," he said. "I do see some things that we're probably going to divest over time."

Hayes pointed to work with lower growth and lower profit margins as those that may not fit.