AP Photo/Reed Saxon
This Feb. 12, 2009 photo shows buildings at the old Rocketdyne facility, the Santa Susana Field Laboratory, in the Simi Valley area near Los Angeles.
You'd have to work pretty hard to find a company with a cooler name and cooler history than Rocketdyne, located in Canoga Park, Calif. The firm makes rocket engines and has, under its own (cool) name since the mid-1950s. Now it's being sold by parent United Technologies, so that UT can spend $16.5 billion to buy Goodrich Corp.
Rocketdyne is currently part of Pratt & Whitney and is no stranger to getting passed around. The sale is also a good example of how even relatively sold companies like United Technologies (market cap: around $78 billion) need to go through some gyrations to grow.
According to Businessweek, UT wanted to sell $4 billion in new stock to fund its purchase of Goodrich, but it's now going to sell assets, including Rocketdyne, and issue a pile of new debt. Given that the assets sales are likely to raise only about $3 billion, UT might have had to take on new debt anyway. But there's no mention in press reports of using stock for the transaction, so this is looking pretty much like a cash-and-debt deal.
In terms of Rocketdyne's continued existence...well, that looks pretty good. UT is selling it because, in the words of CFO Greg Hayes, it's a "very good asset." Businessweeks reports that the bids will be coming in over the next few weeks. I'll try to keep track of who the buyers are.
For what it's worth, mergers-and-acquisition activity in the aerospace business has been on a hot pace in both 2011 and 2012. If UT succeeds in acquiring Goodrich, the $16.5 billion price tag will top last year's all-time high of $16 billion for a single acquisition.