It was once Sacramento, Calif.'s glamour company, a bustling hub on Highway 50 that
employed 22,000 workers and helped put men on the moon.
Now, after decades of drift and uncertainty, Aerojet is going back to its roots.
Aerojet's parent, GenCorp Inc., announced Monday it's buying rival rocket-engine maker Pratt & Whitney Rocketdyne in a $550 million deal that will nearly double GenCorp's business.
The acquisition marries two companies that came of age during the space race and Cold War but have struggled at times in an era of dwindling budgets. Rocketdyne's owner, United Technologies Corp. of Hartford, Conn., is selling the business at a $150 million loss and has said its growth prospects are "limited."
GenCorp and Rocketdyne employ fewer than 6,000 workers combined -- about a tenth of what Rocketdyne alone employed during the 1960s. The purchase isn't expected to add many workers to GenCorp and Aerojet's 1,600-employee headquarters in Rancho Cordova.
Still, the deal cements Aerojet's place in the aerospace and defense industry, which accounted for nearly all of GenCorp's $918 million in revenue last year.
Rocketdyne "almost doubles the size of our company," GenCorp Chief Executive Scott Seymour said in a news release. GenCorp will finance the purchase with a combination of cash and debt.
Analysts said the combined firm should be able to compete more effectively for government work, as well as new business from fledgling commercial space exploration companies such as SpaceX.
"We see a future in space," said Dick Bregard, vice president and deputy to Aerojet's president.
Investors applauded. GenCorp shares closed at $7.58, up 83 cents, on the New York Stock Exchange.
Daniel Holland, who follows United Technologies for investment firm Morningstar, said Rocketdyne remains a worthwhile business.
"It's an asset that's vitally important to the United States, the space administration," he said. "There's always a chance that at some point, the funding could go up."
Rocketdyne engines powered the space shuttle, and the Canoga Park company has won a piece of the shuttle's successor, the Space Launch System. The company told the Los Angeles Times it does $750 million a year in sales.
But defense and space budgets are shrinking, as United Technologies executives acknowledged when they put Rocketdyne on the block in March. UTC is selling a cluster of subsidiaries, including Rocketdyne, to help pay for its $16 billion purchase of aircraft parts maker Goodrich.
Rocketdyne "is still a very good business," UTC chief financial officer Greg Hayes said in March. "But unfortunately, without a national space policy, growth will be limited for some time."
UTC bought Rocketdyne from Boeing seven years ago for $700 million.
In its 2011 annual report, GenCorp said defense and space budgets "are expected to remain under severe pressure."
Jim McAleese, a defense industry consultant in Virginia, said Rocketdyne will strengthen Aerojet as a competitor. He called Aerojet a "midtier player" with a strong reputation.
Rocketdyne will help Aerojet fill out its portfolio. Rocketdyne is known for massive booster engines used at liftoff. Working with renowned NASA
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