2023-06-20 17:56:06 ET
The U.S. Chamber of Commerce on Tuesday said L3Harris Technologies’ ( NYSE: LHX ) planned acquisition of Aerojet Rocketdyne ( NYSE: AJRD ) shouldn’t be blocked on antitrust grounds.
The business group expressed its support for the deal in an online commentary that urges the Federal Trade Commission to avoid “radical” interpretations of the law.
“Based on publicly available information, this merger raises no horizontal concerns because the companies do not compete with each other, and no vertical concerns because the companies are not in the same supply chain,” Sean Heather, senior vice president of international regulatory affairs and antitrust at the chamber, said in a June 20 commentary.
L3Harris ( LHX ), the smallest of the six key U.S. defense contractors by yearly sales, in December offered to buy Aerojet ( AJRD ) for $4.7 billion. The company makes rocket motors for missiles including the Javelin and Stinger that the United States sent to Ukraine.
The U.S. policy of providing weapons and supplies to Ukraine has exposed limits in the defense industry's ability to replenish stocks of missiles. Defense companies not only are facing shortages of skilled labor and key components, but also the likelihood that demand for armaments will collapse after the war in Ukraine ends.
The FTC’s scrutiny of L3Harris's ( LHX ) planned deal comes a year and a half after it sued to block Lockheed Martin’s ( NYSE: LMT ) $4.4 billion acquisition of Aerojet ( AJRD ), arguing that the combined company would be able to cut off supplies of key missile parts to competitors and harm national security. Raytheon Technologies ( NYSE: RTX ), a major supplier of missiles to the armed forces, also objected to the deal.
Lockheed ( LMT ) a month later ended its plan to buy Aerojet ( AJRD ), effectively giving the FTC a key victory in its antitrust efforts.
The chamber of commerce said the FTC should reject the arguments of Sen. Elizabeth Warren (D-Mass.) that L3Harris’s ( LHX ) acquisition of Aerojet ( AJRD ) will reduce competition by reducing the number of defense contractors.
“Being form the same industry doesn’t mean the companies are in the same market,” Heather said in his commentary. “If the FTC embraces this view and follows Senator Warren’s lead the agency will have possibly adopted its most radical theory yet.”
A bipartisan group of more than 30 members of Congress signed off on a letter to the Secretary of Defense supporting the deal, according to reports by Dealreporter and CTFN on Tuesday.
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U.S. Chamber of Commerce backs L3Harris merger with Aerojet Rocketdyne