Headquartered in California, Aerojet Rocketdyne focuses on manufacturing aerospace and defence rocket engines. The company has 15 primary operations sites across the US.

Last year, Aerojet Rocketdyne posted annual revenue of nearly $2bn.

Lockheed Martin will pay $56 per share in cash to acquire Aerojet Rocketdyne. The share price is expected to drop to $51 per share after the payment of a pre-closing special dividend.

The acquisition is expected to bolster Lockheed Martin’s expertise in propulsion technology. The company already uses Aerojet Rocketdyne’s propulsion systems across its Aeronautics, Missiles and Fire Control and Space business areas.

Lockheed Martin president and CEO James Taiclet said: “Acquiring Aerojet Rocketdyne will preserve and strengthen an essential component of the domestic defence industrial base and reduce costs for our customers and the American taxpayer.

“This transaction enhances Lockheed Martin’s support of critical US and allied security missions and retains national leadership in space and hypersonic technology.

“We look forward to welcoming their talented team and expanding Lockheed Martin’s position as the leading provider of 21st-century warfare solutions.”

The acquisition is expected to close in the second half of next year, subject to regulatory and shareholders’ approvals as well as other customary closing conditions.

In a separate statement, Aerojet Rocketdyne president and CEO Eileen P. Drake said: “Joining Lockheed Martin is a testament to the world-class organisation and team we’ve built and represents a natural next phase of our evolution.

“As part of Lockheed Martin, we will bring our advanced technologies together with their substantial expertise and resources to accelerate our shared purpose: enabling the defence of our nation and space exploration.”