US arms maker Lockheed Martin has cancelled its agreement to purchase rocket engine maker Aerojet Rocketdyne Holdings.

Aerojet Rocketdyne produces aerospace and defence rocket engines and has 15 primary operations locations across the US.

The merger was projected to expand Lockheed Martin’s expertise in propulsion technology.

Lockheed Martin chairman, president and CEO James Taiclet said: “Our planned acquisition of Aerojet Rocketdyne would have benefitted the entire industry through greater efficiency, speed, and significant cost reductions for the US Government.

“However, we determined that in light of the FTC’s actions, terminating the transaction is in the best interest of our stakeholders. We stand by our long heritage as a merchant supplier and trusted partner and will continue to support Aerojet Rocketdyne and other essential suppliers in the Defense Industrial Base still overcoming the challenges of the pandemic.”

This announcement comes after the US Federal Trade Commission (FTC) filed a lawsuit to seek a preliminary injunction to stop the acquisition over antitrust concerns.

In December 2020, Lockheed Martin reached a definitive agreement to acquire Aerojet in a deal estimated at $4.4bn.

Now, Lockheed Martin will put efforts to use its capital to receive the highest return on investment.

In a statement, Aerojet Rocketdyne said: “We are poised to deliver substantial value to our shareholders driven by our continued leadership in key space exploration and defence growth markets, including by advancing hypersonics and strategic, tactical and missile defence systems.

“Aerojet Rocketdyne has delivered strong shareholder returns of 166% over the five years prior to the transaction announcement, significantly outperforming the Aerospace and Defence Index by 33% and the S&P 500 by 62%.”