WASHINGTON — In a departure from traditional procurement models, the Department of Defense announced on Tuesday, January 13, 2026, a $1 billion investment in the solid rocket motor business of L3Harris Technologies (NYSE: LHX). The transaction, structured as a convertible preferred equity investment, targets the company’s newly formed Missile Solutions business unit—an entity that includes the critical propulsion assets of the former Aerojet Rocketdyne.
The investment is the first implementation of the Pentagon’s “Go Direct to Supplier” initiative, designed to stabilize and expand the domestic production of solid rocket motors (SRMs). These motors are the primary propulsion source for several high-priority munitions, including the PAC-3, THAAD, Tomahawk, and Standard Missile programs.
Consolidating Propulsion Assets for Scale
The Missile Solutions segment was formally established as a distinct business unit on January 5, 2026, as part of a broader corporate realignment at L3Harris. By “carving out” these assets—which include 100% of the RS-25 rocket engine program and extensive SRM manufacturing facilities in Camden, Arkansas, and Huntsville, Alabama—L3Harris aims to create a pure-play provider focused exclusively on speed and manufacturing depth for the missile industry.
L3Harris has invested over $400 million in internal capital since its 2023 acquisition of Aerojet Rocketdyne to modernize production lines and increase delivery rates. The new $1 billion federal injection is intended to more than triple current rocket motor production capacity by 2030, adding approximately 1 million square feet of new production space and six automated casting lines.
Executive Perspective on the “Arsenal of Freedom”
The deal allows the Department of War to act as a strategic investor rather than a simple customer. This equity position is intended to give the government a direct stake in the industrial base’s success while providing the capital necessary to mitigate vulnerabilities in a market long dominated by a duopoly of L3Harris and Northrop Grumman.
“We are taking action to build today’s ‘Arsenal of Freedom’ by launching a pure-play missile solutions provider,” said Christopher Kubasik, Chairman and CEO of L3Harris. “This partnership position enables us to negotiate multi-year procurement framework agreements for solid rocket motors that are vital to our national security.“
Michael Duffey, the Department of War’s top acquisition and sustainment official, emphasized that the investment is purely economic. “We are not just writing a check that we hope will add capacity,” Duffey stated. “This equity position allows the American people to share in its future success.” The department will not hold a seat on the board of directors or involve itself in the day-to-day management of the spin-off entity.
Timeline for Initial Public Offering (IPO)
The $1 billion investment is held in convertible preferred securities that are slated to automatically convert into common equity upon the completion of an Initial Public Offering (IPO). L3Harris intends to list Missile Solutions as a separate, publicly traded company during the second half of 2026, though the parent company will maintain a majority ownership stake.
The IPO is expected to unlock hidden value within L3Harris’s diversified portfolio while providing investors with direct exposure to a high-growth defense segment. J.P. Morgan Securities LLC is acting as the financial advisor, with Vinson & Elkins LLP serving as legal counsel for the transaction. Further financial details are expected to be released during the company’s Q4 earnings call on January 29.
