US engine specialist Aerojet Rocketdyne (NYSE:AJRD) has reportedly bid about US$2bn for United Launch Alliance, the launch services joint venture shared by aerospace giants Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT).
US engine specialist Aerojet Rocketdyne (NYSE:AJRD) has reportedly bid about US$2bn for United Launch Alliance, the launch services joint venture shared by aerospace giants Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT).
An all-cash offer could be announced as early as next week as pressure to compete with Californian newcomer SpaceX weighs on ULA, reported the Wall Street Journal citing sources.
Reuters claimed Aerojet Rocketdyne approached ULA about the bid in early August. ULA, Boeing and Lockheed Martin declined to comment on the report while Aerojet Rocketdyne did not reply to requests for comment.
As SatelliteFinance went to press, Aerojet Rocketdyne’s share price had risen more than 6.5% on the back of the news.
The US Air Force certified SpaceX’s Falcon 9 rocket for launching national security missions earlier this year, enabling it to break the monopoly ULA has had on the country’s military launches since it was formed in 2006.
SpaceX’s comparatively low prices have already helped it build up a sizeable manifest of commercial missions. ULA has sought a wider slice of the commercial market too so it can tackle strained government budgets but, despite its 100% launch success record, these contracts remain rare largely because of the cost of its Atlas 5 rocket.
The Atlas 5 is also surrounded by political issues in the US because it currently uses Russian-made RD-180 engines. The US government last year banned the use of RD-180 for military purposes beyond 2019, following Russia’s annexation of Crimea. ULA plans to replace Atlas 5 with a new rocket called Vulcan that will be powered by a US-made engine from Blue Origin, although an initial version is not due to be ready until 2019.
It has been buying the RD-180 engines from Florida-based RD Amross, a controversial joint venture between Russia’s NPO Energomash and United Technologies Corporation (UTC).
Notably, Aerojet Rocketdyne had been set to buy UTC’s 50% of RD Amross in a deal that fell apart in June because it failed to get Russian regulatory approval. The transfer of the 50% stake was part of a larger deal that involved Gencorp buying Rocketdyne from UTC back in June 2013, creating Aerojet Rocketdyne.
As well as supplying engines that are also used by Atlas 5 and ULA’s other rockets, Aerojet Rocketdyne had been helping to power the Antares vehicle for another US launch services provider called Orbital Sciences.
However, Orbital Sciences decided to drop its AJ26 engine last year after blaming it for an Antares launch failure on 28 October. Instead it will use NPO Energomash’s RD-181 engines, believing it can avoid a political backlash because, unlike ULA, its immediate missions concern civil and commercial space, and not sensitive government payloads.
*Update – 10 September 2015*
Boeing is less inclined to sell its 50% of ULA than Lockheed, which appears more eager to negotiate a deal as part of a wider portfolio restructuring, the WSJ later reported on 10 September.
The report said the situation is complicated by the prospect of Boeing being picked to build hardware for ULA’s upcoming Vulcan vehicle.
Although Boeing is still not commenting on the speculation, a spokesperson was quoted saying that it remains committed to ULA, and considers it among the important and strategic elements of its portfolio.
ULA announced on the same day that it had secured an agreement that moves it closer to officially ordering the BE-4 engine from Blue Origin, a closely held private company owned by Amazon CEO Jeff Bezos.
Tory Bruno, ULA’s CEO, said: “This agreement gets us closer to having an affordable, domestic and innovative engine that will help the Vulcan rocket exceed the capability of the Atlas V on its first flight and open brand new opportunities for the nation’s use of space.
“This partnership enables each company to leverage its strengths, with ULA bringing production excellence and mission assurance, and Blue Origin bringing innovative engineering concepts and a commitment to lowering the cost of spaceflight.”
