Under the agreement, AE Industrial will acquire majority ownership of the business, while L3Harris will retain an equity stake of around 40 per cent and continue as a strategic partner.
The transaction is expected to close in the second half of 2026, subject to regulatory approvals and standard completion conditions. L3Harris’ RS-25 rocket engine program is excluded from the sale.
L3Harris chair and chief executive Christopher Kubasik said the move was consistent with the company’s strategy of sharpening its focus on core defence priorities while delivering value to shareholders.
“This transaction further aligns the L3Harris portfolio with the US Department of Defense’s core mission requirements and its push for a faster, more agile industrial base,” Kubasik said.
The space propulsion and power systems business spans five sites across the United States and brings together more than six decades of experience in upper-stage rocket engines for national security, civil and commercial space missions. The portfolio also includes in-space propulsion systems, nuclear power technologies and avionics.
AE Industrial said it intends to revive the historic “Rocketdyne” name for the business, acknowledging its legacy as one of the foundational companies of US rocket propulsion.
“Rocketdyne is the birthplace of American rocket propulsion,” said AE Industrial managing partner Kirk Konert. “This transaction gives new life to a pioneer of space and national defence technology, while creating a hybrid model that blends the scale of a major defence prime with the agility of a specialised investor.”
Konert said the firm planned to modernise production of established engines such as the RL10, applying contemporary manufacturing practices while preserving the underlying design.
He added that the partnership would also accelerate development of next-generation propulsion systems, including nuclear propulsion technologies critical to future operations in cislunar space and eventual missions to Mars.
AE Industrial principal Jon Lusczakoski said Rocketdyne’s heritage provided a strong platform for growth. “We see a unique opportunity to scale this iconic business and ensure it remains a cornerstone of national security while evolving to meet future demands,” he said.
L3Harris has increasingly relied on a mix of traditional and non-traditional partnerships as it reshapes its space portfolio. For AE Industrial, the acquisition builds on an established presence in the sector, with current and previous investments including Firefly Aerospace, Redwire Space, York Space Systems, American Pacific Corporation and Calca Solutions.
David Rowe, co-chief executive and managing partner at AE Industrial, said Rocketdyne was a natural fit within the firm’s strategy. “It is a critical market leader, and its addition strengthens our commitment to national security space and space exploration,” he said.
Jefferies LLC acted as exclusive financial adviser to L3Harris on the transaction.