L3Harris Nears $500M Deal to Sell Majority Stake in Space Propulsion Portfolio to AE Industrial

L3Harris Technologies is nearing a major transaction that underscores its strategic shift toward core national security and missile-focused operations. The defense contractor is close to finalizing a deal to sell a 60% stake in a portfolio of space and propulsion businesses to private equity firm AE Industrial Partners, according to people familiar with the matter. The deal, which could be announced as early as Monday, values the portfolio at approximately $845 million, with AE Industrial expected to pay more than $500 million for its majority stake.

Under the proposed agreement, L3Harris will retain a 40% ownership interest while divesting several space-related assets that primarily support NASA and commercial space activities. This move allows the company to sharpen its focus on defense priorities amid rising global demand for missile systems driven by the war in Ukraine and ongoing conflicts in the Middle East.

The space propulsion assets included in the transaction feature the widely used RL10 second-stage rocket engine, a critical component of United Launch Alliance’s Vulcan rocket program. The portfolio also includes in-space propulsion systems for satellite maneuvering, space launch electronics, and advanced nuclear power technologies designed for future lunar and Mars missions. L3Harris will, however, maintain full ownership of the RS-25 rocket engine, which powers NASA’s Space Launch System for the Artemis program, along with the associated facilities and workforce.

For AE Industrial Partners, the deal expands an already strong presence in the space and aerospace sector. Its existing investments include York Space Systems, Redwire, and Firefly Aerospace, positioning the firm to benefit from increased satellite deployment and emerging U.S. defense initiatives such as the Pentagon’s Golden Dome space-based missile defense concept.

L3Harris plans to use the proceeds to expand rocket motor and missile production capacity, fund general corporate initiatives, and potentially reduce debt. The transaction, expected to close in the second half of 2026 pending regulatory approvals, represents part of more than $4 billion in divestitures since the L3-Harris merger in 2018, reinforcing the company’s long-term strategy to streamline operations and prioritize high-growth defense markets.