Aerojet Rocketdyne jumps 7% on report it's soliciting acquisition offers

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• Aerojet Rocketdyne (NYSE:AJRD) soared 7.2% in premarket trading on a report that it's soliciting offers from potential suitors.
• Aerojet (AJRD) is working with advisers on an auction process and asked for indications of interest earlier this month, according to a Reuters report, which cited people familiar. Aerojet could still decide not to sell itself if it doesn't get an offer it believes is attractive.
• The Reuters report comes after Dealreporter in August said that the rocket company has had recent discussions with a few strategic buyers about a potential deal.
• The Dealreporter item highlighted that activist investor Elliott Management, which disclosed a 3.7% stake in AJRD in its most recent 13-F filing, is also a large holder of Howmet Aerospace (HWM). A source speculated that a Howmet potential deal with Aerojet may make sense.
• A potential Aerojet (AJRD) sale comes after FTC filed a lawsuit in late January to block Lockheed Martin's (LMT) $4.4 billion purchase of Aerojet (AJRD). Lockheed terminated the deal in February.

Comments

[bazooooka]

might break above precovid highs

[Recent Aquisition]

@bazooooka I'm happy if it gets to the LMT purchase price... I was planning to be out at $51 after receiving the special payment.

[jackmaster20]

HWM makes mission critical alloys for jet engines and light weight
wheels for trucks & jets. AJRD owns 70% of the solid fuel rocket
propulsion market. Is there enough synergies for this deal to be
consummated..?

I think Plant, the CEO at HWM, seems to run the ''whole show''
at HWM. But he is in his 70s and would step down once this
deal is closed. The combined parts that were forerunners to
HWM were operational messes before Plant brought order and
efficiency. Now HWM is very profitable. The same can not be
said for AJRD. Who would be the new President of HWM after
Plant exits...??

For this deal to work out for common shareholders, AJRD
operations and profitability needs to be improved.
IMO Plant will not be there to fix AJRD like he did ARNC/HWM.
Elliot needs to have a strong experienced CEO recruited to fix
AJRD and they will need to find a new President for HWM
once Plant steps down. Tall orders.

The Easton real estate is not a fit in a combined HWM/AJRD
company. The Sacramento land would have to be sold or
spun off. How that transaction is structured would impact
the terms of this potential merger.

Buying AJRD would make HWM less cyclical. I do not think
Drake could be the new CEO of the combined entity.

IMO this deal would get DOD & FTC approval. All firms would
still be able to buy from a combined HWM/AJRD firm in the
marketplace.

Elliot holds 9% of HWM and approx 4% of AJRD so they seem to
be the folks behind this rumor. Who would Elliot get to become
the new CEO of this combined company, if this merger occurs..?

I think its a stock swap deal to merge these companies. No big
cash payment for common shareholders. I think the deal make
sense. Time will tell.

I fear that Elliot will give Plant a huge bonus to pay a big premium
(to Steel) to buy AJRD. That will not benefit common shareholders.
It will benefit Elliot & Litchenstein.

[tjb314159]

@jackmaster20 Excellent perspective. Many thanks.

[MichaelW_R]

@jackmaster20 I also think your perspective is correct. Obviously, Elliot has a lot to gain here - the benefit of common shareholders is second!! My preference would be to see AJRD sold off to Northrup etc. even though I realize the current administration is dead set against that outcome. 2024 is not that far away and for that matter Nov. 8 is even closer.

[jackmaster20]

@MichaelW_R

Thank you for your comment

I think PE and/or Elliot now know from the failed transaction
with LMT that AJRD can not be sold to a firm in the missile
or flight industry. Since AJRD is the last rocket propulsion
firm that is independent, it almost guarantees a serious FTC
review of any transaction.

There are many other available acquiring firms who could
buy AJRD and continue to allow them to do business with
every aviation/defense firm.

Right now NOC BA LMT can do business with AJRD.
That should not change. DOD will not allow that to
change either.

FWIW I still would like to see AJRD remain independent
and focus upon improving its profitability. AJRD needs a
new CEO. Then in the future be a buyer of smaller specialty
high tech aviation and/or propulsion firms. Missiles and
rockets are a growth industry.

[Hillandale Advisors]

$SPLP needs $STCN $2 billion in NOLs as $AJRD is running process to sell the company. SPLP could realize $200mm AJRD gain on top of their $200mm+ taxable income in 2022!!

www.reuters.com/...

[Consideration]

What a joke, if Raytheon's hypocritical CEO is anywhere around this, that's just an open insult.

[bluescorpion0]

who will buy them when governmnt said LMT cannot?

[1504661]

@scorpionblue
The government prevents a monopoly, not just a sale.
The government actually allows most mergers,
just not ones that create a monopoly.

There's both a purpose and a needed function for what most people call "big government". Sadly most Americans remain under delusions that
"big government" is nothing more than an expensive useless bureaucracy that doesnt do anything, but educated people know better.

[joezapp]

@1504661 Well, they'd better be doing SOMETHING, because they don't do much. Especially if it's not self-serving.

[joezapp]

@scorpionblue Most anyone who's not LMT.

[MichaelW_R]

Interesting development....I wonder what brought this about?

[joezapp]

@MichaelW_R It's not as though AJRD hasn't been in play. Not a surprise by any means.

[MichaelW_R]

@joezapp So Joe who is the lead dog here after the Lockheed deal was squashed by the Biden Administration? Your thoughts?

[joezapp]

@MichaelW_R I bought on the cheap after Lockheed was squashed, as other parties were reportedly interested, and a fine entry on it's own fundamentals anyway. No thoughts on lead dog.