Aerojet acquired by Lockheed in $4.4B deal; future of local campus, staff uncertain

One of the Sacramento region's most notable companies will soon become one with its longtime competitor. Aerojet-Rocketdyne has been acquired by its longtime aerospace cohort, the Lockheed Martin Corporation. Headquartered in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that has approximately 110,000 employees worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. "Joining Lockheed Martin is a testament to the world-class organization and team we've built and represents a natural next phase of our evolution," Aerojet CEO Eileen Drake said. Details of the acquisition came late Sunday. The deal comes at the price of $4.4 billion. What still isn't clear is the fate of the remaining divisions and positions at the local facility "Acquiring Aerojet Rocketdyne will preserve and strengthen an essential component of the domestic defense industrial base and reduce costs for our customers and the American taxpayer," said James Taiclet, Lockheed Martin president and CEO. "This transaction enhances Lockheed Martin's support of critical U.S. and allied security missions and retains national leadership in space and hypersonic technology. We look forward to welcoming their talented team and expanding Lockheed Martin's position as the leading provider of 21st-century warfare solutions." With 2019 revenue of approximately $2 billion, nearly 5,000 employees and 15 primary operations sites across the United States, Aerojet Rocketdyne has been a world-recognized aerospace and defense rocket engine manufacturer. The company has deep customer relationships and significant demand for its innovative technologies. The acquisition adds substantial expertise in propulsion to Lockheed Martin's portfolio, and expands on the solid foundation built by Lockheed Martin and Aerojet Rocketdyne over many years. Aerojet Rocketdyne's propulsion systems are already a key component of Lockheed Martin's supply chain and several advanced systems across its Aeronautics, Missiles and Fire Control and Space business areas, much of which is now based in El Segundo, which has since desolated the campus that borders Folsom's Prairie City Road. Through the years, many residents of Folsom, El Dorado Hills and the surrounding communities have been employed by the space giant. Sunday's announcement detailed that Lockheed will acquire Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) for $56 per share in cash, which is expected to be reduced to $51 per share after the payment of a pre-closing special dividend. This represents a post-dividend equity value of $4.6 billion and a total transaction value of $4.4 billion, including the assumption of net cash. As part of approving the transaction, Aerojet Rocketdyne announced a special cash dividend, revocable at its option through the payment date of $5 per share to its holders of record of common stock and convertible senior notes (on an as-converted basis) as of the close of business on March 10, 2021 and payable on March 24, 2021. The transaction is expected to close in the second half of 2021 and is reportedly subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by Aerojet Rocketdyne's stockholders. Lockheed Martin has a history of successful integrations and will work to efficiently deliver the many strategic and financial benefits of this transaction. A transition team will be formed to allow for a seamless integration and ensure continuity for customers, employees and other stakeholders. In the decades after breaking ground in 1951, Aerojet rose to be one of Sacramento County's largest employers with as many as 20,000 on the local payroll as the company entered the national spotlight when taking a vital role in the country's journey to the moon. Over the years, activity at the Rancho Cordova facility that spans to the borders of Folsom's south side has drastically diminished. Manufacturing operations have shifted to the company's plant in El Segundo, eliminating thousands of jobs locally over the years. In its heyday, the local facility operated 24 hours a day, seven days a week. To accommodate staff, the company even installed a swimming pool and a summer camp for employees' children to enjoy. Additionally, employees had the perks of a company store to purchase household needs. Through the 1960s and well into the '70s, residents who lived in Folsom and communities farther away in El Dorado County could frequently hear the sounds of local rocket engine tests and other activities. After moving its headquarters to Southern California in 2016, one year later, Aerojet announced its latest round of reductions, since eliminating and relocating positions over the last two years to the tune of 1,100, leaving a mere 300 staffers on hand at the facility. The remaining local employees work primarily in the company's finance, legal and administrative divisions. According to Sunday's announcement, the acquisition will increase Lockheed's position as a leading provider of technologies and will improve the position of the United States and its allies in the first against security threats. Many questions remain unanswered about the deal that is sure to remove Aerojet even further away from where it has such a rich history. As of press time Wednesday, no further information was released on the fate of the remaining 300 location positions or whether the Aerojet brand remains in place. Currently, Aerojet is a $2 billion-a-year company with 5,000 employees across the country. During its prime years, Aerojet owned approximately 12,000 acres in Sacramento County between Rancho Cordova and Folsom. The facility continues to operate as a U.S. Department of Defense secure site. In May 2019, several large buildings on the site were reportedly put on the real estate market. Some 800,000 square feet of office space was listed. Industrial sites, such as Aerojet's, tend to have great infrastructure, attractive to many potential users who can utilize the high-capacity water and power lines. Sales of such facilities have proved successful in the region, some examples being the Sacramento Army Depot and the portions of Mather Air Force Base. The land located east, south and west of the sprawling Aerojet property is growing rapidly in the way of residential housing demand with areas such as Folsom Ranch and Rancho Cordova's Sunridge Park and Anatolia Communities. Earlier this year, Elliott Homes broke ground in Rio Del Oro, which includes 2,300 acres of land that were released from an environmental order by the California Department of Toxic Substances in 2008. The site is slated to include 12,000 homes and 4,000,000 square feet of retail, office and industrial space. The acquisition of Aerojet continues to be a developing story locally. In the coming weeks, watch for additional articles by the Folsom Telegraph looking back on the history of the facility and its land and what the future will bring.