US-based aerospace and defense company L3Harris Technologies has announced a major strategic move by selling a controlling 60% stake in its Space Propulsion & Power Systems business to private equity firm AE Industrial Partners.
The deal values the business at approximately $845 million, including debt, and is expected to be completed in the second half of 2026, subject to regulatory approvals.
Key Highlights of the Deal
- AE Industrial Partners will acquire a majority controlling stake (around 60%)
- L3Harris will retain a 40% minority ownership
- The business will operate independently under the “Rocketdyne” brand
- The transaction is limited to the Space Propulsion & Power Systems unit
What Does the Deal Include?
The acquisition covers L3Harris’ space propulsion operations, which focus on:
- Rocket engines and space propulsion systems
- In-space propulsion technologies
- Power systems used in satellite and deep-space missions
- Advanced research areas, including nuclear propulsion technologies
This unit plays a critical role in current and future space missions.
RS-25 Rocket Engine Business Excluded
L3Harris clarified that its RS-25 rocket engine program, which supports NASA’s Artemis Moon missions, is not part of this transaction.
The RS-25 business will remain fully owned and operated by L3Harris.
Why Is L3Harris Selling This Business?
According to the company, the decision aligns with its long-term strategy to sharpen focus on core defense and national security priorities, including:
- Missile defense systems
- Secure military communications
- Advanced surveillance and mission-critical technologies
By divesting majority control of the space propulsion unit, L3Harris aims to:
- Strengthen its balance sheet with fresh capital
- Improve operational focus
- Concentrate resources on high-margin defense programs
Why the Deal Matters for AE Industrial Partners
AE Industrial Partners is a specialized investor in aerospace, defense, and space technologies. This acquisition strengthens its presence in the fast-growing space sector.
Through this deal, AE Industrial gains:
- Control over a legacy space propulsion platform
- Opportunities to accelerate innovation and investment
- A strong position in future space exploration and propulsion systems
The firm plans to expand the business independently and invest in next-generation space technologies.
Company Overview
L3Harris Technologies
L3Harris Technologies is a leading US aerospace and defense company providing advanced defense systems, secure communications, and space solutions to government and commercial customers worldwide.
AE Industrial Partners
AE Industrial Partners is a private equity firm focused on aerospace, defense, space, and industrial technology investments, with an emphasis on long-term value creation.
Impact of the Transaction
Impact on L3Harris
- Receives approximately $845 million in transaction value
- Enhances financial flexibility
- Retains strategic exposure to space propulsion through minority ownership
Impact on AE Industrial
- Gains controlling interest in a critical space propulsion business
- Expands aerospace and space technology portfolio
- Positions itself strongly for future government and commercial space missions
Outcome
The transaction between L3Harris and AE Industrial Partners reflects a broader trend in the global aerospace and defense industry, where companies are streamlining operations and focusing on strategic priorities.
While L3Harris sharpens its focus on core defense systems, AE Industrial is set to accelerate growth and innovation in space propulsion technologies. The deal is expected to play a significant role in shaping the future of the US space and defense ecosystem.
Source: l3 harris press
