Lockheed Martin Corp. (LMT) develops, manufactures, and sells advanced technology products in the areas of aeronautics, defense, energy, telecommunications, and more. The company was formed in 1995 through the merger of defense contractors Lockheed Corp. and Martin Marietta Corp. Since this merger, Lockheed Martin has dramatically strengthened its position as one of the primary contractors of the U.S. Department of Defense and other U.S. federal government agencies. Lockheed Martin, a major military contractor for both U.S. and foreign governments, maintains nearly 400 facilities worldwide as well as 114,000 employees. In 2020, Lockheed Martin reported $6.8 billion in net earnings on $65.4 billion in sales. As of July 12, 2021, the company has a market capitalization of $106.5 billion. Lockheed Martin organizes its business into the following broad areas: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.
Lockheed Martin has executed a number of major mergers and acquisitions throughout its history. These deals have allowed the company to dramatically expand its product offerings and market share globally.
Below, we look in detail at 4 of Lockheed Martin’s most important acquisitions. The company does not provide a breakdown of how much profit or revenue each acquisition currently contributes.
Martin Marietta Corp.
- Type of Business: Aerospace, Chemicals, and Electronics
- Acquisition Price: More than $10 billion in common stock exchanged to complete the merger
- Date Purchased: March 15, 1995
The first deal on our list created the company now known as Lockheed Martin. In 1995, Lockheed Corp. and Martin Marietta Corp. merged to form a new, giant manufacturer of military hardware and services. The deal merged the second- and third-largest defense contractors in the U.S. into the world’s largest defense contractor with annual sales of roughly $23 billion and 170,000 employees. The merger created a company capable of serving every need of the U.S. armed services, except for tanks and submarines. The merger was seen as crucial to the long-term survival of both companies. The end of the Cold War had cut government demand for military hardware industrywide by more than 50% during the 1990s.
- Type of Business: Military Electronics and Systems Integration
- Acquisition Price: $9.1 billion
- Date Purchased: Apr. 22, 1996
About a year after the merger of Lockheed Corp. and Martin Marietta Corp., the newly created Lockheed Martin acquired the majority of military electronics company Loral Corp for $9.1 billion. As part of the deal, Lockheed Martin bought Loral’s main military electronics business. Loral’s remaining businesses were spun off as Loral Space & Communications. As with the merger of Lockheed and Martin Marietta, this deal was spurred by the end of the Cold War when many defense companies were consolidating. The Federal Trade Commission (FTC) determined that Lockheed Martin’s acquisition of Loral constituted a violation of antitrust laws, and the company settled. Under the settlement, the company agreed to divest its systems engineering and technical services (SETA) contract with the Federal Aviation Administration and to limit its activities in other key business areas.
- Type of Business: Defense and Commercial Aviation
- Acquisition Price: $9 billion
- Date Purchased: Nov. 6, 2015
One of Lockheed Martin’s recent acquisitions is helicopter manufacturer Sikorsky Aircraft. Sikorsky was founded as Sikorsky Manufacturing Corp. in 1925 by Igor Sikorsky, the legendary aviation pioneer known for developing the helicopter and other aircraft. Prior to Lockheed Martin’s acquisition, Sikorsky was owned by United Technologies Corp. The acquisition was among Lockheed Martin’s largest, and it represented a strategic expansion into rotary-wing aircraft manufacturing for military and commercial customers. In particular, the deal diversified Lockheed’s military aircraft offerings and provided the company with a 65% share of the U.S. military rotary-wing aircraft business, including manufacture of the Black Hawk helicopter. As part of the acquisition, Sikorsky Aircraft was rebranded as Sikorsky, a Lockheed Martin Company.
- Type of Business: Aerospace and Engine Manufacturer
- Acquisition Price: $4.4 billion
- Date Purchased: Pending; announced Dec. 12, 2020, anticipated closing in second half of 2021
Aerojet Rocketdyne Holdings (AJRD) is a major manufacturer of propulsion and energetics systems for the U.S. Department of Defense, NASA, and similar clients. The company was founded in 1915 as the General Tire & Rubber Company and has evolved over the years into an owner of radio and TV stations, hotels, an airline company, and aerospace. The company entered the aerospace business in 1945 when it acquired Aerojet Engineering Corp. It officially became Aerojet Rocketdyne Holdings in 2015. Lockheed Martin announced that it had entered a definitive agreement to acquire the company in Dec. 2020, with the acquisition anticipated to close in the second half of 2021. The completion of the acquisition will aid in Lockheed's vertical integration, as it already purchases a substantial number of engines from Aerojet Rocketdyne. The acquisition is not without its challenges, however. Lockheed competitor and Aerojet Rocketdyne customer Raytheon Technologies Corp. (RTX) announced in Feb. 2021 that it planned to formally oppose the proposed acquisition on the grounds that it would hinder its access to Aerojet products. Nonetheless, in March 2021 the acquisition made a significant step forward, as Aerojet Rocketdyne shareholders voted to approve the agreement. The deal still must receive approval from U.S. regulators.