The Defense Department has completed its $1 billion investment in L3Harris Technologies’ missile-making unit, ahead of a planned initial public offering later this year.
DOD’s capital infusion is a convertible preferred security that will convert into common equity if, as planned, the IPO turns the company’s Missile Solutions business into an independent, publicly-traded company. DOD is also receiving warrants to purchase additional shares.
L3Harris said Thursday it will retain roughly 80% ownership of the new company.
Missile Solutions houses much of the defense portfolio of Aerojet Rocketdyne, which L3Harris acquired in 2023 to enter the solid-rocket-motor and munitions markets. Aerojet was one of the two primary providers of rocket propulsion systems for missile and space launch programs, along with the Orbital ATK business acquired by Northrop Grumman in 2018.
Suppliers are increasing hard-pressed to meet demand for solid rocket motors and munition stockpiles has grown because of the wars in Ukraine and the Middle East.
DOD’s direct investment in the Missile Solutions business follows other defense-related equity-stake acquisitions, in rare earth mineral suppliers and the chipmaker Intel. The Trump administration has so far made direct investments in 10 companies.
Executives said the Missile Systems unit intends to spend most of the DOD funds and the proceeds from its IPO to expand and improve its rocket factories in Camden, Arkansas; Huntsville, Alabama; and Orange, Virginia.
On Thursday, members of L3Harris’ executive team rang the opening bell at the New York Stock Exchange.
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