Leidos To Buy Dynetics For $1.65 Billion To Form New Aerospace Titan

It looks like the aerospace industry might have a new titan on its hands as Leidos is acquiring Dynetics for $1.65 billion.

The announcement on Tuesday (Dec. 17) confirms that Dynetics will become owned entirely by Leidos, which is based in Virginia. The acquisition comes as the company is seeking a more significant presence in hypersonic space solutions, autonomy and sensors.

The merger of the two companies also allows space weapons to be considered. The acquisition is expected to close in the first quarter of 2021. It was unanimously supported by the boards of directors from both companies. There is very little public information about Dynetics as they are a privately held company.

What the public should know is that space solutions and hypersonic comprise about 25% of Dynetics revenue. It is also public information that they are building the universal stage adapter for NASA's space launch system and that they provide structural qualification testing for the United Launch Alliance. Dynetics is also providing support technology and solutions for Maxar Technologies.

So they bring quite a bit of innovation and technology as well as money to the table as the space program in the U.S. heats back up. A report by SpaceNews indicates that they are also building the power and propulsion element of NASA's Lunar Gateway Space Station.

Most of the time, when two companies come together, there is fear of layoffs and clash of corporate structure and culture. However, it appears that both of these companies feel that their technologies are complimentary.

Leidos has expressed hope that all 2,300 Dynetics employees will also make the transition that would bring the total headcount for both companies to 36,300 people, which is pretty substantial. It is not very often that the corporate culture between two entities is synergistic.

Leidos is designing space sensors to track hypersonic weapons, which is a vast market in the military world. That part of the aerospace market has heated up recently as the United States and other world powers are developing new hypersonic weapons. As these weapons are being developed, the ability to track and defend against them must also be developed.

Jim Reagan, Leidos chief financial officer, said space programs are an area where Dynetics offers the most synergies with Leidos. “The engineering and high-end technology opportunities that we see there are going to spring from the technological capabilities that Dynetics brings to us."