|
 Aerojet Rocketdyne, which makes rocket engines, submitted the cash
bid to buy ULA, the sole provider of launch services for U.S.
military and spy satellites, in early August, sources familiar with
the matter told Reuters on Tuesday.
Officials at Lockheed, Boeing, Aerojet and ULA have declined to
comment on the bid, which caught many by surprise. Wall Street
bankers and industry executives also question whether the reported
price tag overstates the value of ULA, and may have been a tactic to
open negotiations with Aerojet Rocketdyne.
The U.S. Defense Department would undertake a detailed review if the
deal proceeds, looking at any financial liabilities, potential
impact to the supply chain, projected research funding levels and
other issues, said the official, who asked not to be named since the
offer has not been publicly announced.
“The government would be very engaged in trying to understand that
business case,” said the official, offering the Defense Department's
first public comments on the bid. The official said the Pentagon's
view was "more negative."
"We're hoping that we’ve been too conservative," the official said.
The proposal was "unsettling," the official said, given the U.S.
government's current dependence on ULA to launch U.S. spy and
military satellites into orbit, and recent launch failures involving
three other companies, including privately held Space Exploration
Technologies, or SpaceX, which is cleared to start competing with
ULA for big satellite launches.
Any change in ownership and the resulting expected efforts to
consolidate personnel, infrastructure and facilities, could
jeopardize ULA's flawless launch record, analysts said.
ULA has held a monopoly on launches of large U.S. military and spy
satellites since its creation in 2006, logging 99 consecutive
successful launches, and it still has a large backlog for now.
But the company's revenues face mounting pressure in coming years,
given a slowdown in orders from the U.S. government, its main
customer; the advent of cheaper launches from SpaceX; and the Air
Force's plan to phase out $1 billion in annual launch support
payments to ULA.
Analysts forecast that ULA's earnings are likely to drop to around
$300 million a year from about $480 million as orders decline,
reducing the payout to Lockheed and Boeing.
[to top of second column] |
The company is trying to reel in more commercial launches, but faces
difficult competition in an overcrowded field that is "overdue" for
consolidation, said David Wireman, managing director of consultancy
AlixPartners.
A congressional ban on use of Russian-built RD-180 rocket engines
for military and spy satellite launches has further complicated the
company's outlook.
ULA this year announced plans to develop a new U.S.-powered rocket
that could better compete with SpaceX, but that effort will require
about $1 billion in investment.
ULA hopes to use a new engine being developed by Blue Origin, which
is owned by Jeff Bezos, founder of Amazon.com, but is also
continuing to work with Aerojet Rocketdyne, which is working on a
separate engine called AR-1.
Lockheed and Boeing are funding the development effort on a
quarter-by-quarter basis, reflecting their own concerns about ULA's
future business outlook and whether U.S. lawmakers will allow ULA to
use more of its existing stock of Russian engines.
Aerojet officials argue that it would be cheaper to integrate its
new AR-1 engine into ULA's existing Atlas 5 rocket than building a
new rocket and engine, but space experts caution that such
integration efforts can also be difficult and costly.
"This is truly rocket science," the defense official said.
(Additional reporting by Mike Stone in New York; Editing by Jonathan
Oatis)
[© 2015 Thomson Reuters. All rights
reserved.]
Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
