By the end of the month, Canoga Park-based aircraft engine maker Pratt & Whitney Rocketdyne may have a new owner. Rocketdyne’s parent company, United Technologies Corp., put the division and two others on the selling block in March to raise capital for its $18 billion purchase of aerospace manufacturer Goodrich Corp. In a recent conference call with analysts, United Technologies CFO Greg Hayes said the company was in final negotiations on the sale of Rocketdyne and expected to have it done by June 30. While the buyer’s identity remains tightly under wraps, analysts say there are several possible suitors — and all have one thing in common: significant ties to the growing commercial space industry. That bodes well for the division, whose core business did not tightly align with that of parent United Technologies, they say. Names floated as potential buyers include Alliant Techsystems Inc., or ATK, a Virginia-based aerospace company developing the Liberty commercial spacecraft; GenCorp. in Northern California; Orbital Sciences Corp. also of Virginia; and Sierra Nevada Corp., which is building the Dream Chaser space vehicle. Reports, which some say are questionable, put billionaire Paul Allen into the mix, and even Boeing Corp., which owned Rocketdyne until 2005. Rocketdyne employs 1,500 workers at two campuses in the Valley — one on Canoga Avenue and another at DeSoto Avenue and Nordhoff Street. The division’s pending sale comes as the commercial space — or NewSpace — industry turns a corner. Last month, the Dragon cargo spacecraft launched and docked at the International Space Station. The Dragon, built by Space Exploration Technologies (SpaceX) of Hawthorne, Calif., was the first privately-funded vehicle to reach the space station, pushing SpaceX to lead the pack for cargo and satellite missions. And on the manned spaceflight side, Virgin Galactic and The Spaceship Company in Mojave continue testing suborbital SpaceShipTwo and its carrier aircraft, WhiteKnightTwo. “We are entering a new era,” said Marco A. Caceres, senior analyst and director of space studies with Teal Group, an aerospace and defense industry analysis firm. “If I were an investor, I would not invest in a company that holds to the old way of doing NASA business. Those vehicles are expensive.” Observers say that despite a storied legacy of making engines that landed Apollo astronauts on the moon and powered the space shuttles for 30 years, Rocketdyne’s most promising future lies in the commercial business, especially considering the shuttle program ended last year and there are questions about future NASA budgets and projects. Rocketdyne could leverage its technology to help build rockets and spacecraft carrying humans, joining the growing legion of commercial players who are filling the gap left by NASA. “Rocketdyne being able to supply the booster (engine) would make them look good to those looking at that market,” said Michael Blades, senior industry analyst, aerospace and defense, for Frost & Sullivan, a business research and consulting firm based in Northern California. Stacking Up the Suitors Rocketdyne’s future will be shaped by its new owner and industry observers say its future could look very different depending which company swoops in for the buy. For example, a company with its own engineering staff and R&D capabilities will find ways to make an acquisition financially viable — even if that means eliminating duplications in manpower. In other words, Blades said, Rocketdyne could be in for layoffs. “Anytime a company comes in and buys another company they want to find efficiencies and that lends itself to a smaller size and not having overhead and still getting the job done,” Blades said. On the other hand, an emerging company may be able to benefit from Rocketdyne’s highly-skilled engineering team and R&D prowess. In that case, he said, jobs in the Valley would more likely be preserved. Caceres said potential Rocketdyne buyers fall into four groups: traditional aerospace companies, subcontractors wanting to make the leap to prime contractor of space launch vehicles, emerging NewSpace companies, and wealthy private investors, such as Allen. Alliant and GenCorp. are considered industry leaders in rocket propulsion technology. Alliant, which now is working on the Liberty spacecraft, supplied the solid rocket motor for the space shuttle. And GenCorp.’s Aerojet rocket and missile propulsion division dates back to the 1930s and has done work for the U.S. Air Force and Navy. If either company were to make a bid to purchase Rocketdyne, Caceres said, the issue of whether the acquisition would result in a monopoly likely would surface. “They dominate the industry in terms of engines and motors for space systems,” he said. “It would be a huge advantage (for them) and the government may not approve.” Another company said to be eyeing Rocketdyne is Orbital Sciences of Dulles, Va. Orbital Sciences has contracted with NASA to use its Antares rocket to deliver cargo to the International Space Station beginning this year. If the company is trying to vertically integrate its rockets and leverage liquid propulsion capabilities, then purchasing Rocketdyne may make sense for the company, said Michael Ciarmoli, an aerospace analyst for KeyBanc Capital Markets. Although, he added, “I see hesitation from them to do a deal while they are extremely focused on getting this rocket launched and have the platform advance to the next stage.” Emerging NewSpace leaders such as SpaceX would benefit from Rocketdyne’s proven expertise and staff, Caceres said. But the company has its hands full with ambitious projects and is not in a position to do an acquisition. Allen, who made his money as co-founder of Microsoft and who funded the Ansari X Prize-winning SpaceShipOne suborbital craft, lands in that group, as well, he said. In April, Aviation Week reported that Allen, aviation pioneer Burt Rutan and former NASA administrator Mike Griffin were in the process of buying Rocketdyne. David Postman, a spokesman for Vulcan Inc., Allen’s investment firm, said that report, however, was not true. Allen has no interest in Rocketdyne, he said. Allen is the founder of Stratolaunch Systems, which is building the world’s largest aircraft to launch rockets carrying satellites and other payloads. Stratolaunch will operate from the Mojave Air & Space Port in the Antelope Valley. Rutan and Griffin serve on the company’s board. Analysts declined to speculate on which company is most likely to buy Rocketdyne, but Alliant and GenCorp. appear to be frontrunners. Meanwhile, as the pending sale nears, Rocketdyne remains busy doing what it has done for five decades. It contributed to 14 launches of Atlas V and Delta IV rockets in 2011 and is scheduled for 11 launches this year. Between January 2011 and March 2012, the company received $470 million in NASA contracts, according to Blades.
Rocketdyne Attracts Suitors from Commercial Space
