Boeing is close to selling its storied Rocketdyne rocket-engine manufacturing business in Southern California to United Technologies in...
LOS ANGELES — Boeing is close to selling its storied Rocketdyne rocket-engine manufacturing business in Southern California to United Technologies in a deal potentially worth about $500 million, industry sources said yesterday.
The sale of Rocketdyne, which helped pioneer space exploration in the 1960s, was rumored as Boeing has struggled to turn a profit in the launch business. The possible sale to Hartford, Conn.-based United Technologies was first reported by The Wall Street Journal.
Boeing has been “shopping around” Rocketdyne for at least a year, the sources said, and United Technologies is believed to be the only suitor to have made a serious proposal.
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The sources said a deal was imminent, though one person close to Boeing stressed the two sides were still working to settle on the terms. Among the possible stumbling blocks are environmental-liability issues related to Rocketdyne’s Santa Susana rocket-testing complex in Simi Hills, Calif.
Spokesmen for Boeing and United Technologies declined comment.
With headquarters in Canoga Park, Calif., Rocketdyne is perhaps best known as the manufacturer of the main engines for the space shuttle. It also has developed a new generation of engines for military rockets known as Evolved Expendable Launch Vehicle, or EELV, for the Air Force.
But Rocketdyne’s work force has steadily shrunk since the Apollo program ended in the mid-1970s.
The commercial-satellite rocket-launch business has been hobbled by a downturn in telecommunications dating back to the dot-com bubble burst in 2000. Boeing’s overall rocket-launch business has declined from two dozen annually to nine in 2004.
Jon Kutler, president of aerospace investment bank Jefferies Quarterdeck in Los Angeles, noted the U.S. rocket industry had been severely battered by shrinking demand for satellites and increased international competition from Japan, China and Europe.
“This is a sector that is overdue for consolidation,” he said.
The Air Force EELV, designed to send military satellites into space more reliably and cheaper, was seen as a possible comeback for Rocketdyne when Boeing initially won the lion’s share of EELV orders. But then a former Boeing rocket-program manager was charged with stealing trade secrets from competitor Lockheed Martin during the bidding process.
The Air Force, after finding out about the pilfering of documents, took away about $1 billion of rocket orders and suspended Boeing from future rocket work.