L3Harris Technologies has agreed to sell a controlling stake in its space propulsion and power systems business to private equity firm AE Industrial Partners in a deal valued at $845 million. Under the agreement, L3Harris will retain an approximately 40 percent ownership interest in the business, while its RS-25 rocket engine program will remain outside the scope of the transaction, according to the company’s press release published Monday.
Christopher Kubasik, chairman and CEO of L3Harris, said the move supports the company’s effort to sharpen its focus on the Department of War’s core mission priorities. “L3Harris is strongly committed to the Department of War’s (DoW) vision for a faster, more agile defense industrial base while remaining laser-focused on driving value for our shareholders and customers,” the past Wash100 Award recipient said.
The transaction is expected to close in the second half of 2026, pending regulatory approvals and other customary closing conditions. Jefferies served as the exclusive financial adviser to L3Harris.
Why Is L3Harris Partnering With AE Industrial?
L3Harris said AE Industrial’s experience investing in space and national security-focused companies informed its decision to pursue the partnership. AE Industrial’s prior space-related investments include Firefly Aerospace, Redwire Space and York Space Systems.
How Does the AE Industrial Acquisition Fit L3Harris’ New Business Structure?
The potential sale coincides with a reorganization of L3Harris’ operating structure, which took effect Monday, consolidating its four business segments into three. Under the new model, the missile solutions segment—led by Ken Bedingfield—now houses propulsion and advanced missile technologies, including hypersonics.
Sam Mehta, formerly president of communication systems, now leads space and mission systems, which groups together satellite and payload capabilities. Meanwhile, communications and spectrum dominance, headed by former Integrated Mission Systems President Jon Rambeau, integrates the company’s resilient communications and electronic warfare portfolios.
L3Harris said it will provide additional details on how the reorganization affects financial reporting during its earnings call scheduled for Jan. 29, including the realignment of 2025 results into the new three-segment framework.
