Private Equity Firm Steps Into Space Propulsion

L3Harris Technologies (LHX) is reportedly close to finalizing a deal that would hand over majority control of its space and propulsion operations to private equity firm AE Industrial Partners. The transaction values the businesses at $845 million in total, with AE Industrial paying north of $500 million for its 60% stake, according to a Reuters report published Sunday.

L3Harris will keep the remaining 40% ownership, which gives it ongoing exposure to the business while freeing up resources to chase bigger priorities elsewhere. For AE Industrial, the acquisition opens doors into space exploration ventures and the Pentagon's Golden Dome initiative, a program focused on next-generation missile warning systems.

What's Being Sold and What's Staying

The assets changing hands include the RL-10 second-stage rocket engine, a workhorse component that powers the Vulcan rocket. That's the joint venture between Boeing (BA) and Lockheed Martin (LMT) that's been positioning itself as a key player in commercial and government space launches.

But L3Harris isn't selling everything. The company is holding onto full ownership of the RS-25 rocket engine, which currently powers NASA's Space Launch System for the Artemis program. That's NASA's flagship initiative to return humans to the moon and eventually push toward Mars, so keeping that engine in-house makes sense if L3Harris wants to maintain a foothold in high-profile space exploration.

Neither L3Harris nor AE Industrial responded to requests for comment on the deal.

Strategic Pivot Toward Defense

This sale fits into a broader strategy at L3Harris to streamline operations and double down on national security work. The company has been shedding some of its NASA-focused business lines while chasing bigger defense contracts. Case in point: L3Harris secured a contract worth up to $843 million in December to build 18 additional infrared national-security missile-tracking satellites. Those will be integrated and tested at the company's Palm Bay campus.

The company's recent quarterly results back up the strategy shift. L3Harris posted better-than-expected third-quarter earnings with total revenue climbing 7% year-over-year. CEO Christopher Kubasik pointed to strong demand, a record backlog, and early investments in growth areas like space and munitions as reasons the company remains on track to hit its 2026 financial targets and sustain long-term profitable growth.

The stock has been rewarding that focus. Over the past year, L3Harris (LHX) shares have surged 49.04%, according to market data. On Friday, the stock closed 3.72% higher at $304.48, reflecting continued investor confidence in the company's trajectory.