L3Harris to sell majority stake in space propulsion unit to AE Industrial

WASHINGTON — L3Harris Technologies said Jan. 5 it will sell a majority stake in its space propulsion business to private equity firm AE Industrial Partners, marking the first major restructuring of its space portfolio since acquiring Aerojet Rocketdyne in 2023.

AE Industrial agreed to acquire a 60% interest in L3Harris’ Space Propulsion and Power Systems business, a stake valued at $845 million. L3Harris will retain a  40% ownership stake in the business, with the transaction expected to close in the second half of 2026, subject to regulatory approvals and other customary closing conditions.

The Space Propulsion and Power Systems unit develops advanced rocket engines, in-space propulsion systems and space power technologies. Its portfolio includes the RL-10 upper-stage engine, in-space electric thrusters and power systems used on spacecraft and exploration missions, as well as work on next-generation capabilities such as nuclear surface and in-space power concepts. The business supplies hardware for missions ranging from Mars rovers to NASA’s lunar Gateway.

The deal excludes the RS-25 rocket engine program, which will remain fully owned and operated by L3Harris. The RS-25 engine powers NASA’s Space Launch System for Artemis lunar missions and carries long-term contractual and mission commitments. By retaining the program, L3Harris preserves its role as the prime supplier and maintains continuity for NASA.

Sale aligns with L3Harris focus on defense

L3Harris said the transaction reflects a broader strategic refocus toward core national defense priorities, particularly missile production and other defense systems. The assets being divested — including RL-10 engines used on commercial and government launch vehicles, in-space propulsion technologies and space power systems — are seen as better suited to integration within a broader commercial and space-focused investment portfolio.

The RL-10 second-stage engine is used on the Vulcan rocket built by United Launch Alliance, the joint venture of Boeing and Lockheed Martin.

“L3Harris is strongly committed to the Department of War’s vision for a faster, more agile defense industrial base while remaining laser-focused on driving value for our shareholders and customers,” Christopher Kubasik, chairman and CEO of L3Harris, said in a statement. “This transaction further aligns the L3Harris portfolio with DoW core mission priorities.”

The sale is the first major reworking of L3Harris’ space propulsion business since it acquired Aerojet Rocketdyne in 2023 and folded its propulsion and space power assets into the company.

AE Industrial said it plans to restore and use the Rocketdyne name for the acquired business, reviving one of the most recognizable brands in U.S. rocket propulsion.

“Rocketdyne is more than just a company, it is the birthplace of U.S. rocket propulsion,” Kirk Konert, managing partner at AE Industrial, said in a statement. “This transaction will not only modernize and give new life to a pioneer of space and national defense technology, but it will also create a new hybrid model of agile collaboration, combining the stability and power of a national defense prime with the innovation of a specialized investor. By taking the historic engine – the RL10 – and applying modern manufacturing discipline, we will honor its design while revolutionizing the production line.”

AE Industrial’s space investments include launch provider Firefly Aerospace, space infrastructure firm Redwire Space and satellite manufacturer York Space Systems.

The partnership between AE Industrial and L3Harris will also seek to accelerate development of future propulsion technologies, including nuclear propulsion, which both companies say will be critical for deep-space exploration and operations in the cislunar domain.

“We see a unique opportunity to apply our deep experience in scaling space systems to this iconic business,” said Jon Lusczakoski, a principal at AE Industrial.