L3Harris Technologies Inc. (LHX) has finalized the divestiture of its rocket-engine manufacturing unit to a private equity-backed consortium, marking a pivotal shift in its strategic focus. The transaction, valued at $425 million, underscores the company’s refocus on core defense systems and electronic warfare platforms.
- L3Harris sold its rocket-engine business for $425 million in cash
- Proceeds will reduce net debt and fund growth in electronic warfare systems
- The business generated ~$120M annually in recent years
- Acquirer is a private equity consortium with plans to scale propulsion output
- Approximately 480 employees transitioned under retention agreements
- CFIUS approval confirmed before closing
L3Harris Technologies Inc. (LHX) has completed the sale of its rocket-engine business segment to a private equity-led consortium, effective January 4, 2026. The transaction, structured as an asset sale, includes proprietary propulsion technologies, key intellectual property, and a specialized workforce based at facilities in Huntsville, Alabama, and Los Angeles, California. The deal is valued at $425 million in cash, with proceeds earmarked for debt reduction and reinvestment in high-growth defense electronics and command-and-control systems. The move reflects a broader corporate strategy shift by L3Harris toward sectors with faster deployment cycles and stronger margins. The rocket-engine business, while technologically advanced, had limited revenue growth over the past three years, averaging around $120 million annually, according to internal financial disclosures. In contrast, L3Harris’s electronic warfare and integrated sensor systems division delivered over $2.3 billion in revenue in fiscal year 2025, representing a 7% year-over-year increase. Market analysts note that the divestiture could positively impact LHX’s stock performance in the near term, as investors react favorably to improved capital efficiency. The sale also signals growing interest from private equity in niche aerospace propulsion assets, with the acquiring group planning to expand production capacity and pursue contracts with both commercial space firms and U.S. Department of Defense programs. The transaction affects approximately 480 employees across the two locations, with most transitioning to the new entity under retention agreements. Regulatory approvals were secured through the Committee on Foreign Investment in the United States (CFIUS), ensuring compliance with national security guidelines governing sensitive propulsion technology.