L3Harris Technologies is set to sell a 60% stake in its space and propulsion businesses to private equity firm AE Industrial Partners, marking a significant move in the space industry. The deal, which could be announced as soon as Monday, aligns with L3Harris’ strategy to focus on national security and shed some of its NASA-related business lines. This transaction represents one of the larger space industry deals in recent months, reflecting the growing trend of private equity firms consolidating capabilities across commercial and defense space sectors.
The portfolio of businesses being sold has an enterprise value of $845 million, with AE Industrial expected to pay over $500 million for its 60% stake. L3Harris will retain a 40% stake in the portfolio, which includes the RL-10 second-stage rocket engine, a critical component used in positioning assets in space aboard Boeing and Lockheed Martin’s Vulcan rocket. Additionally, the portfolio encompasses in-space propulsion systems, nuclear power technology for lunar and Mars applications, and electronics supporting space launch operations.
AE Industrial’s acquisition could open doors to opportunities in space exploration and the Pentagon’s Golden Dome initiative, a multi-layered space-based missile defense architecture. This deal is strategic for AE Industrial, which already has investments in satellite maker York Space Systems, satellite component company Redwire, and Firefly Aerospace.
L3Harris plans to use the proceeds from this deal to invest in rocket motor and missile production capacity, pay down debt, and for general corporate purposes. The demand for missiles has surged due to conflicts in Ukraine and the Middle East, benefiting contractors like L3Harris as militaries worldwide aim to replenish stockpiles.
This partial divestiture is part of L3Harris’ broader strategy to streamline operations around its core defense capabilities. Since the merger of L3 and Harris in 2018, the company has made over $4 billion worth of divestitures. The transaction is expected to close in the second half of 2026, pending customary closing conditions.
The deal underscores the ongoing consolidation in the space industry, driven by increasing demand for satellite systems and space-based defense technologies. As private equity firms like AE Industrial continue to invest in and consolidate these capabilities, the landscape of the space industry is poised for significant transformation.
Mike Stone, a Reuters reporter covering the U.S. arms trade and defense industry, noted, “The partial divestiture of the space propulsion portfolio would mark more than $4 billion worth of divestitures since L3 and Harris merged in 2018, as the company streamlines operations around its core defense capabilities.” This strategic shift highlights L3Harris’ commitment to focusing on missile production and national security, while private equity firms like AE Industrial capitalize on the growing opportunities in the space sector.
As the industry evolves, such partnerships and investments will play a crucial role in advancing space exploration and defense technologies, shaping the future of the space industry.