L3 Harris closes on $1 billion Pentagon deal to spin-off former Aerojet Rocketdyne assets

Unusual DoW investment follows Trump administration’s $1.5 trillion budget request

By the Arkansas Delta Informer Staff

East Camden, Ark. – April 23, 2026 – Only days after the Trump administration announced a record $1.5 trillion budget, one of the nation’s largest defense contractors closed on new billion dollar investment from the Pentagon to expand the company’s southern Arkansas missile and rocket making capabilities.

L3Harris Technologies announced today (Thursday, April 23) that it has closed a $1 billion strategic investment from the Department of War (DoW) that will allow the Florida defense contractor to spin off its recently Missile Solutions (MSL) business, including its Aerojet Rocketdyne subsidiary purchase only three years ago.

The Melbourne, Fla.-based defense giant said it will use the proceeds from the Pentagon stock sale to expand and modernize its MSL facilities, accelerate research and development, and increase production capacity for critical national security technologies.

The DoW investment, along with proceeds future initial public offering (IPO) and other sources of capital, will be used to further a variety of expansion and modernization efforts at solid rocket motor production facilities in Camden, Ark., Huntsville, Ala., and Orange, Va.

“This strategic partnership with the Department of War is a testament to the critical role L3Harris plays in our national security,” said L3Harris Chairman and CEO Chris Kubasik. “The investment will allow us to accelerate innovation and enhance our ability to deliver the advanced capabilities our warfighters need to deter and defeat emerging threats.

In a deal that has raised eyebrows on Wall Street as the Trump administration’s Department of War has taken a major step into the equity markets by acquiring stakes in publicly traded U.S. companies, the Pentagon investment is in the form of a convertible preferred security of the MSL business.

That convertible stock will convert into common equity after an initial public offering (IPO) by L3 Harris. Following the IPO,  the DoW will also receive warrants to purchase additional MSL common stock in the future.

After the original deal was announced in January, L3Harris said it intends to pursue the IPO in the second half of 2026, creating a newly traded public company “focused on delivering critical propulsion systems at unprecedented speed and scale.”

Since acquiring U.S. rocket motor maker Aerojet Rocketdyne in July 2023 for $4.7 billion, L3Harris said it has made significant investments to transform and expand its production operations. That includes creating newly formed MSL business to house most of the Aerojet Rocketdyne assets and bringing together all the company’s capabilities to support offensive and defensive missile systems.

L3Harris said it is investing billions to transform and grow its production operations at MSL in support of DoW priorities like PAC-3, THAAD, Tomahawk and Standard Missile. MSL was created in early 2026, bringing together the missile capabilities from across L3Harris, including the operations of legacy Aerojet Rocketdyne.

Following the Pentagon-back IPO later this year, L3Harris will remain the majority shareholder with at least an 80% stake in the new MSL business and will consolidate the financial results of the newly, publicly traded concern.

Besides the IPO, the Pentagon is also backing L3 Harris’ new Arkansas Advanced Propulsion Facilities (AAPF) campus at the sprawling Highland Industrial Park in East Camden. L3 also broke ground in November with Gov. Sarah Sanders present on its large, solid rocket motor (SRM) production site that spans 110 acres and is expected to increase SRM manufacturing capacity by six times.

The campus will expand by adding 230,000 square feet of manufacturing and office space to the larger 2,000-acre Camden site, increasing total manufacturing space to over 1.5 million square feet. Program-agnostic equipment and buildings will also allow the company to quickly adjust production to meet current demand and respond to changing customer needs.

L3 officials stated that the new facilities will be dedicated to producing medium and large rocket motors, which are essential for tactical and air defense missiles, missile defense targets, interceptors, hypersonic vehicles, and emerging missile defense requirements.

Exactly three years ago, under former President Biden, the Department of Defense’s (DoD) Office of Manufacturing Capability Expansion and Investment Prioritization (MCEIP) entered into a $215.6 million agreement with Aerojet Rocketdyne (AR) to expand and modernize AR’s facilities in the 19,000-care defense industrial complex in Calhoun County.

As the primary rocket motor subcontractor for the prime defense contractors such as Lockheed Martin, Northrop Grumman, Boeing and General Dynamics, L3 Harris entered 2026 with a record a backlog exceeding $38 billion. However, the Pentagon is pushing the defense industry to speed up munitions and armored vehicle production amid concerns over depleted stockpiles and rising global threats.

Pentagon budget to expand defense production outside current supplier base

In fact, ahead of announcing the $1.5 trillion DoW budget on Tuesday, April 21, the largest request in U.S. history, President Trump invoked a Defense Production Act waiver to expand its supplier base by enlisting companies outside the defense industry to participate in  weapons manufacturing.

On Tuesday, DoW budget officials said the president’s fiscal year 2027 budget request was aimed at, among other things, supporting service members and their families, securing the American homeland, modernizing equipment, rebuilding the defense industrial base and providing a raise to service members. 

“This is a generational investment in the United States military— the arsenal of freedom,” said Pentagon Controller Jules Hurst III. “This 42% (budget) increase will supercharge our defense industrial base by expanding production of major weapon systems, while strengthening supply chains and supporting tens of thousands of small and medium-sized businesses. It secures our homeland and military advantage through investments in the Golden Dome missile defense system, drone dominance and space superiority.” 

Besides its IPO deal with L3 Harris, the DoW has also finalized agreements to launch IPOs and acquire stakes in rare earth companies to compete with China. In July 2025, the DoD and Las Vegas-based MP Materials announced a multibillion-dollar public-private partnership to significantly accelerate the development of a comprehensive U.S. rare-earth magnet supply chain and decrease foreign dependence.

Under that agreement, the DoD committed to purchasing $400 million worth of MP’s common stock, with a warrant to buy additional shares later. MP Materials stated it is investing over $1 billion and hiring more than 1,000 manufacturing workers in the United States. 

During the Trump administration’s ongoing tariff-driven trade war, China’s restrictions on rare earth deals for U.S. manufacturers and suppliers include sourcing delays due to new licensing requirements and wait times of two to three months for export permits.

Currently, the U.S. also relies heavily on China’s technical expertise for processing rare earth materials and other critical elements. This dependence stems from China’s gradual, strategic buildout of a fully integrated supply chain since the 1980s, which now dominates the rare earth industry.

Today, rare earth minerals include 17 elements on the periodic table, specifically 15 lanthanides, yttrium, and scandium. China is targeting materials used as semiconductors, especially neodymium, praseodymium, dysprosium, and terbium, which have unique magnetic properties. These magnets are used for a variety of household appliances, electronics, electric vehicles, clean energy tech, and even defense uses in jets, radars, and missiles.

Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, highlighted in a 2025 research report that rare earth permanent magnets are essential components in a range of defense capabilities for the U.S. military, including the F-35 Lightning II aircraft, Virginia and Columbia class submarines, and unmanned drones and aerial vehicles.