GenCorp Closes Rocketdyne Buy

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Leading aerospace products manufacturer GenCorp Inc. (GY) recently completed the acquisition of the Pratt & Whitney Rocketdyne business from diversified business conglomerate United Technologies Corp. (UTX) for an undisclosed amount. Post-acquisition, GenCorp will combine Rocketdyne with its wholly-owned subsidiary Aerojet-General Corporation. The combined entity will operate under a new name – Aerojet Rocketdyne, Inc., with its headquarters in Sacramento, CA.

With the acquisition, GenCorp will also procure a 50% ownership stake in RD AMROSS, a Cocoa, Florida-based joint venture between Pratt & Whitney Rocketdyne and NPO Energomash of Khimki, Russia. The acquisition nearly doubles the size of GenCorp and is likely to offer economies of scale with complimentary product offerings.

Furthermore, the acquisition facilitates Aerojet to have a virtual monopoly on medium- and large-sized, liquid-fueled rocket engines. On the other hand, the divestiture enables United Technologies to focus more on its core aerospace and commercial businesses. The transaction, therefore, is a win-win deal for both the participating companies.

Based in Hartford, Conn., United Technologies provides high-end technology products and services to the building systems and aerospace industries worldwide. The company is a diversified business conglomerate serving various end markets such as aerospace, defense and commercial construction. The business diversification allows the company to remain profitable during tough economic times.

The operations of the company are primarily classified into two principal businesses: commercial and aerospace. Under its commercial business, the company has Otis and the UTC Climate, Controls & Security division, which combined the former Carrier and UTC Fire & Security divisions. The aerospace business of the company consists of Sikorsky aircraft and the UTC Propulsion & Aerospace Systems, which includes UTC Aerospace Systems and Pratt & Whitney divisions.

United Technologies presently has a Zacks Rank #3 (Hold). Other notable companies in the industry include ITT Corporation (ITT) and Compass Diversified Holdings (CODI), each carrying a Zacks Rank #2 (Buy).

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