US-based space technology manufacturer GenCorp is set to almost double in size through acquiring rocket systems developer Rocketdyne for US$550m.
GenCorp expects to acquire the group, from technology and aerospace giant United Technologies Corp (UTC),…
US-based space technology manufacturer GenCorp is set to almost double in size through acquiring rocket systems developer Rocketdyne for US$550m.
GenCorp expects to acquire the group, from technology and aerospace giant United Technologies Corp (UTC), with a combination of cash on hand and the issuance of debt.
The debt element will be provided by Morgan Stanley Senior Funding and Citigroup Global Markets. Citigroup also acted as Gencorp’s exclusive financial adviser on the transaction.
UTC was advised by Deutsche Bank and Moelis.
According to GenCorp CEO Scott Seymour, the deal will better position both companies to compete in a highly competitive marketplace, enabling it to provide more affordable products.
Seymour said the move also “provides additional growth opportunities as we build upon the complementary capabilities of each legacy company that has enabled a generation of human space travel and national security launch services.”
Both companies expect to close the deal in the first half of 2013, although it is subject to regulatory approvals.
UTC will use the sale proceeds to repay a portion of the short-term debt being used to finance its proposed US$16.5bn takeover of manufacturer Goodrich.
Louis Chênevert, CEO of UTC, said the move represented a significant step in its ongoing portfolio transformation.
“While it is not core to UTC’s commercial building systems and aerospace businesses, Rocketdyne is a solid company and a national asset with many talented employees,” said Chênevert.
Several parties had reportedly expressed interest in acquiring the unit, including private equity firms.
Rocketdyne is one of a handful of assets that UTC has identified for divestment. Other assets being put on the block include renewable energy firm Clipper Windpower, and three subsidiaries of manufacturer Hamilton Sundstrand: Milton Roy, Sullair and Sundyne.
UTC’s subsidiary Pratt & Whitney bought Rocketdyne for around US$700m from Boeing back in early 2005. The company was then merged with Pratt & Whitney Space Propulsion to form Pratt & Whitney Rocketdyne.
Rocketdyne was formed by North America Aviation in the aftermath of the Second World War to adapt the German V-2 missile into a rocket engine. Its engines have been used by companies including Lockheed Martin and Boeing. It also manufactured parts that were used in the now retired NASA space shuttle.
GenCorp currently owns rocket propulsion specialist Aerojet, which recently announced that its new president would be Warren Boley, a 27 year veteran of Pratt & Whitney.
