The US FTC has voted unanimously to sue to block arms maker Lockheed Martin’s proposed $4.4 billion purchase of rocket engine maker Aerojet Rocketdyne over antitrust concerns, the agency said on Tuesday.
Lockheed said in its earnings announcement on Tuesday morning that it had been told by the FTC that its “concerns regarding the transaction cannot be adequately addressed by a consent order,” which would require Lockheed to either abandon the deal or launch a lawsuit to close the purchase.
Related: Lockheed’s $4.4B Deal With Aerojet Rocketdyne Delayed
The deal has drawn criticism because it would give Lockheed, the No. 1 US defense contractor by revenue, a dominant position over a vital piece of the US missile industry. Missile maker Raytheon has been an outspoken opponent of the proposed deal.
The deal has attracted opposition in the US Congress including from Senator Elizabeth Warren. She has expressed keen interest in corporate behavior and asked the FTC to examine the premise and efficacy of internal firewalls such as those Lockheed has proposed to prevent it from gaining a competitive advantage over peers once the deal closes, according to a July 16 letter.
Warren more generally has asked the FTC to take a tougher look at defense industry mergers.
The US Department of Defense drafted a memo last fall that did not oppose the deal outright, but expressed that if merged the company should follow guidelines on how it conducted business, according to a person familiar with the memo.
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