L3Harris to sell majority stake in space propulsion unit; Rocketdyne name set to return under AE Industrial

When the RL10 rocket engine first ignited in 1962, the Rocketdyne name stamped on its metal became synonymous with the early American space age. More than six decades later, that brand is set to return to the foreground as L3Harris Technologies moves to hand control of its space engine business to a private equity firm and refocus its own bets on missiles and NASA’s Artemis moon program.

Deal terms and timeline

L3Harris said Jan. 5 it has agreed to sell a roughly 60% stake in its Space Propulsion and Power Systems unit to AE Industrial Partners in a transaction that values the carved-out business at about $845 million on an enterprise basis. The defense contractor will retain an approximately 40% minority interest in the new company, which AE Industrial plans to operate under the revived Rocketdyne name.

The deal, announced from L3Harris’s headquarters in Melbourne, Florida, is expected to close in the second half of 2026, subject to antitrust and national security reviews and other customary conditions. It will transfer one of the country’s most important space propulsion portfolios out of a major defense prime and into a private equity-controlled platform at a moment when launch markets, missile demand and industrial-base concerns are all in flux.

What’s included—and what’s not

The business being sold includes the RL10 family of hydrogen-fueled upper-stage engines, in-space propulsion systems and thrusters, space power technologies including nuclear-related research, and launch and spacecraft avionics. It operates across five U.S. sites and traces its heritage through Aerojet Rocketdyne, which L3Harris bought in 2023 for $4.7 billion.

L3Harris is explicitly excluding the RS-25 program from the sale. The RS-25, a high-performance liquid hydrogen/liquid oxygen engine originally developed as the Space Shuttle Main Engine, now powers the core stage of NASA’s Space Launch System rocket for Artemis lunar missions. That program, along with solid rocket motor production, will remain with L3Harris.

Strategy shift: space engines out, missiles in

In a statement announcing the deal, L3Harris Chair and Chief Executive Christopher Kubasik framed the move as part of a broader reshaping of the company’s portfolio around defense work.

“L3Harris is strongly committed to the Department of Defense’s vision for a faster, more agile defense industrial base while remaining laser-focused on driving value for our shareholders and customers,” Kubasik said. “This transaction further aligns the L3Harris portfolio with [Defense Department] core mission priorities.”

The propulsion unit being sold is expected to generate about $2.8 billion to $2.9 billion in revenue in 2025, according to figures cited by industry publications—implying the deal values the business at roughly 0.3 times next year’s sales. That relatively low multiple for a high-heritage propulsion supplier suggests both the challenges of competing in a cost-pressured launch market and the potential upside AE Industrial sees in improving margins and production.

For L3Harris, the sale will partially monetize the Aerojet Rocketdyne acquisition while leaving intact the pieces most closely tied to surging demand for munitions and missile defense. The company has announced plans for a major expansion of its solid rocket motor facilities in Camden, Arkansas, aiming to sharply increase output of large motors used in missiles and interceptors. It has also secured a multi-year contract, valued at up to $292 million, to supply solid rocket motors for the Javelin anti-tank weapon.

That tilt toward tactical and strategic weapons systems aligns with pressure on the Pentagon and its suppliers to replenish stockpiles and accelerate production after Russia’s invasion of Ukraine and heightened tensions in the Middle East. It also marks a step back from some commercial and civil space propulsion markets that face fierce competition from vertically integrated launch providers developing their own engines.

Rocketdyne’s core asset: the RL10

At the heart of the package is the RL10, a liquid hydrogen/liquid oxygen upper-stage engine that has flown on Atlas and Delta rockets and now powers United Launch Alliance’s Centaur upper stages. ULA has ordered more than 100 RL10 engines to support its next-generation Vulcan Centaur rocket, which is slated to carry national security payloads and Amazon’s Project Kuiper broadband constellation, among other missions.

The divested business also includes in-space propulsion systems for satellites and deep-space probes, as well as early-stage nuclear power and propulsion technologies aimed at future lunar and Mars missions and cislunar operations. Launch and spacecraft avionics, including flight computers and power distribution hardware, round out the portfolio.

AE Industrial’s pitch: modernize production, bet on nuclear

AE Industrial, based in Boca Raton, Florida, specializes in aerospace and defense investments and manages roughly $7.5 billion in assets. Its holdings already span much of the space value chain: small and medium launch provider Firefly Aerospace, space infrastructure firm Redwire, small-satellite maker York Space Systems, and propellant and specialty chemicals producer American Pacific Corp.

In its own statements, AE Industrial cast the Rocketdyne acquisition as the cornerstone of a propulsion platform it describes as strategically vital to the United States.

“Rocketdyne is a key strategic national asset,” AE Industrial partner Kirk Konert said, adding that the firm aims to modernize production of the RL10. “By taking the historic engine – the RL10 – and applying modern manufacturing discipline, we will honor its design while revolutionizing the production line.”

AE Industrial has also highlighted the unit’s nuclear propulsion work as a long-term prize, saying the deal will help advance technologies that could one day shorten transit times to Mars and support sustained operations in cislunar space. Those ambitions tie the transaction to emerging policy debates over how to regulate nuclear systems in space and how to manage the risks of launching nuclear material.

Regulatory scrutiny and customer implications

The transaction will undergo review by U.S. antitrust authorities and national security officials, though unlike the failed bid by Lockheed Martin Corp. to acquire Aerojet Rocketdyne in 2020, both the buyer and seller in this case are not direct competitors in the same propulsion segment. The Federal Trade Commission sued to block the Lockheed-Aerojet tie-up over concerns it would give Lockheed control over a key supplier to rival missile manufacturers; Lockheed abandoned that deal in 2022.

When L3Harris later acquired Aerojet Rocketdyne, regulators allowed the purchase to proceed with conditions designed to preserve competition. Splitting off the space propulsion portion to an independent, U.S.-based financial sponsor may ease some of those earlier worries about prime contractors controlling bottleneck technologies, but it also concentrates a critical capability in a portfolio controlled by private equity.

The ownership change will be closely watched by customers such as ULA and NASA, which rely on RL10 and related systems for national security missions, crewed flights and scientific payloads. Neither L3Harris nor AE Industrial detailed any immediate workforce reductions in their announcements, and both emphasized continuity of operations as the deal moves toward closing.

A reshuffled space industrial base

Beyond the balance sheets, the reshuffling underscores a broader reordering of the U.S. space industrial base. Defense primes like L3Harris are sharpening their focus on missiles, electronic warfare and government spacecraft, while financial firms assemble specialized platforms that stitch together everything from propellant chemistry to engines, launch vehicles and on-orbit infrastructure.

If the transaction closes as planned, future Vulcan launches and, potentially, early nuclear-propelled missions will be powered by engines whose lineage runs back to Rocketdyne’s work on Atlas and Saturn. The question facing policymakers and customers alike is how that legacy will fare under a new owner whose business is not building rockets, but buying and selling the companies that do.