L3Harris to Sell Majority Stake in Space Propulsion Unit for $845 Million
L3Harris Technologies announced on Monday that it will sell about 60 per cent of its space propulsion and power systems business to private equity firm AE Industrial Partners for 845 million US dollars, including debt. The move is part of the company’s ongoing strategy to pivot away from space ventures and focus more strongly on defence capabilities amid growing geopolitical uncertainty.
Strategic Refocus on Defence and Modern Warfare
As part of its restructuring, L3Harris will streamline its organisation from four business segments to three, aligning its operations with future warfare requirements. The new divisions will include Space and Mission Systems, led by Sam Mehta; Communications and Spectrum Dominance, headed by Jon Rambeau; and Missile Solutions, overseen by Ken Bedingfield.
“We’re now best poised to deliver the speed, technology and commerciality required by our most important customer – the warfighter,” said L3Harris CEO Christopher Kubasik. The company emphasised that the reorganisation aims to enhance efficiency and ensure faster delivery of advanced technologies to its defence clients.
Retaining Key Space Assets and Partnerships
While divesting the majority of its propulsion business, L3Harris will retain full ownership of the RS-25 rocket engine, which powers NASA’s Space Launch System used in the Artemis lunar exploration programme. The decision underlines the company’s continued involvement in critical space missions while reducing exposure to the broader commercial space market.
The transaction, which was first reported by Reuters on Sunday, is expected to close in the second half of 2026, pending regulatory approval. AE Industrial Partners said the investment would strengthen its growing portfolio of space-focused companies and support the development of next-generation propulsion technologies, including nuclear propulsion systems that could play a vital role in future Mars exploration.
AE Industrial Expands Space Investment Portfolio
AE Industrial has a strong record of investing in aerospace and defence firms, with previous stakes in Firefly Aerospace, RedWire Space, and York Space Systems. The firm said its partnership with L3Harris would help accelerate innovation in propulsion technologies critical to both government and commercial space missions.
The deal underscores the increasing specialisation of major US defence contractors, as they prioritise advanced military technologies and partnerships to maintain strategic advantage in a rapidly evolving global security landscape.
with inputs from Reuters
