Maker of Rocket Engines Is Sold
Boeing Co. said Tuesday that it had agreed to sell its Rocketdyne rocket engine manufacturing business in San Fernando Valley to United Technologies Corp. for about $700 million in cash.
The sale of storied Rocketdyne, which helped pioneer space exploration in the 1960s, was expected, and came amid Boeing’s struggle to turn a profit in the space launch business.
For Hartford, Conn.-based United Technologies, the acquisition will help broaden the product line at its Pratt & Whitney unit, which in recent years has lost market share in its core jet engine business.
Analysts said the sale was unlikely to lead to major job cuts or shuttering of plants or offices. Rocketdyne has its headquarters in Canoga Park and facilities in West Hills and the Simi Hills. It employs 3,200 people.
Because Pratt & Whitney makes smaller engines for upper stage rockets while Rocketdyne manufacturers larger engines for main booster rockets, there is likely to be little overlap that could prompt United Technologies to make major cuts, analysts said.
“I don’t normally see Pratt & Whitney and Rocketdyne in competition with each other,” said Marco Caceres, a space analyst for the aerospace research firm Teal Group Inc.
Pratt & Whitney spokesman Dan Coulom said the company “has no plans for the foreseeable future to move facilities or to reduce employment.”
The sale marks the latest move by Boeing to shed unprofitable businesses and focus more on large scale weapons and aerospace systems.
“I think there is greater value with Rocketdyne belonging to someone else,” said James Albaugh, president of Boeing’s Integrated Defense Systems business.
Boeing expects to post a small gain from the sale, which analysts said seemed to be for a fair price.
Once at the forefront of space exploration, Rocketdyne has been hobbled by a downturn in commercial satellite launches amid the telecommunications bust that started in 2000. When it was building rocket engines for the Apollo program in the 1960s, Rocketdyne’s payroll was 25,000.
In recent times, its main business has been upgrading engines for the Space Shuttle and developing an engine for a new generation of military rockets known as Evolved Expendable Launch Vehicles, or EELVs. Boeing said Rocketdyne would continue to supply the engines for the Boeing-built EELV rockets.
Separately Tuesday, Boeing said it would sell its aircraft parts manufacturing plant in Wichita, Kan., to Canadian investment group Onex Corp. for about $900 million. The plant makes the fuselage for Boeing’s 737 jetliner.
Boeing shares fell 63 cents to $52.15 while United Technologies lost $2.27 to $98.64, both on the New York Stock Exchange.
