US-based space technology manufacturer GenCorp is to sell its Liquid Divert and Attitude Control Systems (LDACS) business in order to secure Federal Trade Commission approval for its US$550m transformation acquisition of rocket systems developer Pratt &…
US-based space technology manufacturer GenCorp is to sell its Liquid Divert and Attitude Control Systems (LDACS) business in order to secure Federal Trade Commission approval for its US$550m transformation acquisition of rocket systems developer Pratt & Whitney Rocketdyne.
GenCorp and Rocketdyne’s parent company United Technologies had agreed to the sale back in July 2012. However, in October the FTC sent both parties a request for additional information focusing in particular on the LDACS business.
In response, the companies amended their purchase agreement, removing the provision that provided that GenCorp would not be required to divest its LDACS business.
A modified request for additional information was then sent by the FTC at the beginning of 2013, adjusting its original investigation by excluding GenCorp’s large and medium liquid rocket engines for launch vehicles and spacecraft and focussing purely on its LDACS operations.
With the planned sale, GenCorp hopes that the FTC will complete its investigation and the transaction can be completed in H1 2013.
The deal is hugely significant for GenCorp as it will almost double the size of the company. For the year to 31 December 2011, Rocketdyne generated US$792m in net sales and US$149m in EBITDAP. GenCorp, for the year to 30 November 2011, posted US$918m in net sales and US$115m in EBITDAP.
To fund the acquisition, GenCorp has secured commitments from Morgan Stanley and Citigroup to provide senior unsecured bridge loans worth up to US$510m. The remaining consideration would be funded through cash on hand.
GenCorp’s core businesses is its rocket propulsion specialist Aerojet and it is thought likely that if the Rocketdyne purchase is successful then the two businesses would be consolidated.
Citigroup is advising GenCorp on the transaction while Deutsche Bank and Moelis are advising UTC.
