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U.S. Regulators Clear Aerojet-Pratt & Whitney Rocketdyne Merger

WASHINGTON — Nearly a year after the sale was announced, Aerojet parent company GenCorp Inc. purchased Pratt & Whitney Rocketdyne (PWR) in a $550 million transaction that will leave just two major players standing after more than a decade of consolidation in the U.S. rocket propulsion industry.

The combined company will be called Aerojet Rocketdyne and be headquartered in Sacramento, Calif., GenCorp said in a June 14 press release. 

The sale closed despite a finding by the Federal Trade Commission that the deal violated U.S. antitrust laws. With reservations, U.S. regulators ultimately opted not to block the transaction after the Defense Department pleaded a case for a timely merger in the name of national security. The commission, which had held up the sale for about a year to vet for antitrust violations, announced its decision June 10.

Warren M. Boley has been named president of Aerojet Rocketdyne. Jim Maser, former president of Pratt & Whitney Rocketdyne, will stay on with the new company as vice president of corporate strategy and development, GenCorp said in separate press releases.

Now that GenCorp of Rancho Cordova, Calif., has acquired PWR from United Technologies Corp. of East Hartford, Conn., there is only one merchant supplier of liquid-fueled rocket engines in the United States. Aerojet also makes solid-fueled rocket motors, and its rival in that business is ATK Aerospace Group of Magna, Utah.

The sale also gives Aerojet a virtual monopoly on medium- and large-sized, liquid-fueled rocket engines. Upstart launch services provider Space Exploration Technologies Corp. of Hawthorne, Calif., exclusively uses liquid-fueled engines that it builds itself, but does not sell to other companies. 

Despite the combined company’s dominant position regarding large liquid-fueled rocket engines, it was a small specialty propulsion product that kept the sale in limbo for nearly a year, U.S. regulators said.

The Federal Trade Commission found the merger, first announced in July 2012, would violate Section 7 of the Clayton Act and Section 5 of the Federal Trade Commission Act by granting GenCorp a monopoly on liquid divert and attitude control systems (LDACS), a type of small-rocket engine used for maneuvering missile defense interceptors and some spacecraft. Both Aerojet and PWR make LDACS. 

“[T]he proposed transaction will likely result in higher prices and inferior LDACS products,” Michael Moiseyev, assistant director for the commission’s Bureau of Competition, wrote in a  June 6 letter to Susan Raps, the Pentagon’s deputy general counsel for acquisition and logistics. 

The commission posted the letter, and a reply from Raps, on its website June 10.

Regulators’ concerns about the LDACS business had been known for months to GenCorp, which in an Oct. 22 filing with the U.S. Securities and Exchange Commission said it would work with the Federal Trade Commission to resolve any antitrust issues related to its LDACS business.

Subsequently, in a Jan. 8 press release, GenCorp announced it was “in the process of preparing its LDACS business for sale to facilitate an expeditious completion” of the commission’s antitrust investigation.

That sale never happened.

In a June 6 reply to Moiseyev, Raps wrote that “the risk to the nation’s security is too great to justify a divestiture [of Aerojet’s LDACS business] to preserve competition.”

Raps added that there are “highly unusual national security circumstances” that require both the Aerojet and PWR LDACS production lines to keep running smoothly to avoid disruption of a variety of missile defense systems.

Prior to the merger, Aerojet’s main liquid-fueled propulsion products were the AJ-26, a refurbished Soviet-produced engine that powers the main stage of Orbital Sciences Corp.’s fledgling Antares rocket; and smaller engines used for in-orbit spacecraft maneuvers. With the addition of PWR, Aerojet now has the RL-10, variants of which power the upper stages of United Launch Alliance’s Atlas 5 and Delta 4 rockets — used to launch the vast majority of U.S. government payloads — and the Delta 4’s RS-68 main engine. The Atlas 5’s RD-180 main engine is supplied by RD AMROSS, a joint venture of PWR and Energomash, the Moscow-based outfit that builds the engine. 

Both Aerojet and PWR have roles in the Space Launch System, the heavy-lift rocket being developed for NASA for deep-space exploration. Notably, PWR was chosen to supply the Apollo-heritage J2-X upper-stage engine intended for use on the heaviest configurations of this rocket, and to act as the custodian for the surplus space shuttle main engines that will be used on initial versions of the heavy lifter. Both Aerojet and PWR hold contracts to study new side-mounted boosters for the massive rocket — ATK will supply five-segment solids for early SLS flights.

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