WSJ: Aerojet Rocketdyne Wants to Buy ULA

WSJ: Aerojet Rocketdyne Wants to Buy ULA

Rocket engine maker Aerojet Rocketdyne (AJR) wants to buy United Launch Alliance (ULA) for approximately $2 billion according to the Wall Street Journal (WSJ).  No deal has been made yet, but the companies are in “advanced talks” according to the newspaper.

Neither company has made any official announcement so far.  ULA is a 50-50 joint venture between Lockheed Martin and Boeing that builds and launches the Atlas V and Delta IV rockets primarily for national security satellites.   Aerojet merged with its main domestic rival, Pratt & Whitney Rocketdyne, in 2012.  AJR provides the RS-68 engines that power the Common Booster Core for ULA’s Delta IV rocket, the solid rocket motors for Atlas V, and the RL10 engines for the upper stages used for those rockets.

The emergence of new competitors in U.S. rockets and rocket engines, including SpaceX and Blue Origin, coupled with concerns about using Russian RD-180 engines for the national security launches on the Atlas V and reduced demand for national security launches overall is changing the dynamics of the U.S. space launch business. 

ULA has been essentially a monopoly provider of launches for the national security sector since it was created in 2006, but with Air Force certification of SpaceX for certain classes of national security launches, it now has a competitor.  Meanwhile, its Atlas V rocket is under attack because it uses Russian rocket engines and current law requires that use of RD-180s for national security launches end by 2019, although ULA and the Air Force are trying to extend that deadline. 

ULA has announced major changes over the past year, including a decision to discontinue the medium-size version of the Delta IV and initiating development of the Vulcan rocket and ACES upper stage that would ultimately replace Atlas V and the larger Delta IV Heavy.  Vulcan would be an Atlas V, but using Blue Origin’s innovative methane-based BE-4 engines instead of Russian RD-180s.  ULA later said a new AJR engine, AR1, using traditional LOX/kerosene propellant, was a backup alternative.

A consortium of companies including AJR recently tried to obtain production rights to the Atlas V apparently with the goal of substituting the AR1 for the RD-180s, but was rebuffed and the Air Force confirmed that ULA held those rights, not the government.

The prospect of AJR buying ULA is a new twist that could have interesting ramifications both in terms of consolidation in the U.S. launch industry and the ability of new entrants to compete against it, especially in the engine development market.

The WSJ article said an announcement could come “as early as next week.”  Any planned merger would be subject to government review.

ULA is headquartered in Centennial, CO and produces the Atlas V and Delta IV in Decatur, AL.   AJR is based in Sacramento, CA.

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