What Happened Last Week in Special Situations?
  • Western Digital $WDC announced review of strategic alternatives after Elliott's push to split.

  • Zymeworks $ZYME adopted shareholder rights plan after All Blue Falcons’ proposal.

  • Aerojet Rocketdyne $AJRD feuding CEO and Chairman filed opposing shareholder presentations.

  • Hasbro $HAS activist Alta Fox lost battle for board seats.

  • Hemisphere Media $HMTV shareholder Edenbrook Capital says takeover price dramatically undervalues company.

  • New Relic $NEWR activist JANA won two board seats.

"Since 2008 [JANA's activism campaigns are] averaging a return of 16.2% versus 9.4% for the S&P 500 over the average nine-month holding period."

  • $GSK spin-off Haleon starts life with target on its back.

"Those factors may lead some investors to steer clear, depressing Haleon’s valuation. It could prove more appealing to a rival...Haleon may find it harder to repel a suitor next time around."

  • Vodafone $VOD preps spinoff of IoT biz.

"Buried in Vodafone's annual report is the revelation that IoT is being prepped for a spinoff. Greater independence from the parent company 'will help to accelerate the platform's growth and attractiveness...'

  • JetBlue $JBLU submitted an improved proposal to acquire Spirit $SAVE.

$AJRD Left Behind
Remember when Lockheed Martin $LMT announced their intent to acquire Aerojet Rocketdyne $AJRD and the FTC sued to block the deal? Ever wonder why Lockheed was willing to pay a 25% premium for the company? We'll let's take a quick look at this little rocket company.

The primary business of $AJRD is rocket propulsion systems. In terms of competition in this field, it is quite dense.

However, $AJRD is the only systems maker to service and build all 4 types of propulsion systems.

In terms of where their revenue comes from it's basically all government contracts. However, it is pretty diversified across various departments.

$AJRD has a fairly linear growth path providing propulsion systems not only for defense-based rockets but also for space exploration rockets in the future.

As for why Lockheed Martin wanted to acquire the company the explanation is somewhat obvious. They already have several large contracts with the company to build the propulsion/engine systems for Lockheeds rockets.

The initial announcement of $LMTS intent to acquire caused $AJRDS stock to jump 25%.

Unfortunately given the fact that $AJRD is the last independent missile propulsion provider the FTC sued to block the deal.

This caused the stock to drop about 18% and overall the company has fallen ~25% from its post-deal-announcement highs.

While Lockheed won't be able to own it I have been looking at it for quite a while. Just look at the consistency of sales growth and the EBITDAP Margin growth.

Unfortunately, Cash Flow seems to be a problem, and probably worth diving a little deeper to see what's going on there.

Overall I think $AJRD is a fairly overlooked company producing steady returns for shareholders by consistently growing sales and winning contracts from both the US Government and other Government Contractors.
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Edmund Simms's avatar
$18.3m follower assets
Corporate shuffleboard, February 18, 2022
A smattering of headlines from the world of corporate shuffleboard. Pushing discs won’t create value, but it can springboard its revelation.

Initial public offerings
  • Vår Energi offer price fixed at NOK 28 per share.
  • Hualan Biological Becterin set pricing for Shenzhen IPO.
  • AD Ports raised $1bn before market debut.
  • Spanish fashion retailer, Tendam, sees €2bn valuation in IPO.
  • Thyssenkrupp CFO said possible listing of Nucera would take place in H1.
  • Kids Clinic India filed for IPO.
  • Al-Dawaa Medical Services IPO price range set at SAR 65-73 per share.
  • India’s Life Insurance Corp filed for $8bn IPO.

Mergers & acquisitions
  • Shipping group MSC targets successor to Alitalia.
  • British Government fined JD Sports (LON: JD), Footasylum $6.4m for breaching terms.
  • End of Lockheed-Aerojet (NYSE: $LMT, $AJRD) deal pressures leadership of both firms.
  • Intel (NASDAQ: $INTC) unveiled $5.4bn Tower (TLV: $TSEM) deal.
  • Crypto firm Fireblocks bought payments tech platform for $100m.
  • Spotify (NYSE: $SPOT) acquired Podsights and Chartable to grow podcasting business
  • U.S. sued to stop merger of Rhode Island hospital companies

Divestitures & spin-offs
  • Repsol (BME: REP) struggled to tempt buyers to renewables unit.
  • Toshiba (TYO: 6502) is considering sale of air conditioner business.
  • Danish pension fund ditched Wizz Air (LON: WIZZ) over labour rights.
  • Italy’s Leonardo (BIT: LDO) suspends search for automation division partner.
  • Discovery-WarnerMedia (NASDAQ: DISCA) deal cleared U.S. antitrust review.
  • Australia’s AGL (ASX: AGL) sees job cuts, cost savings as demerger plans progress.
  • EDF (EPA: EDF) confirms deal to take over French nuclear turbine unit from GE (NYSE: GE).
  • Informa (LON: INF) announced sale of Pharma Intelligence for £1.9bn to Warburg Pincus (NYSE: WPCA).
  • RWE (FRA: RWE) could add $19bn in value if it ditches brown coal according to Enkraft.

Share repurchases & buybacks
  • Essilorluxottica SA (EPA: EL) buyback reflects confidence in long-term prospects.
  • Amgen (NASDAQ: $AMGN) to buy back $6bn in shares this quarter.
  • ArcelorMittal (AMS: $MT) raised dividend and announced new $1bn capital return.

Originally posted in my newsletter here.
Brad Thibeau's avatar
$101.3m follower assets
$AJRD Rumors
If you're not familiar with the company, Aerojet Rocketdyne is a smaller cap defense and space company(roughly $3.30B). They have strong tech in both spaces, very favorable economics, and strong real estate holdings as well. Contracts with both NASA and the department of defense that will continue on for the foreseeable future.

Strong business that could continue on as they have since the early 1900s without a problem. This morning, a rumor came across that Boeing and Lockheed Martin are pursuing buying the company.

As expected, this shot the stock way up. 30% gain on the rumors which was welcomed by investors since the stock is flat on the year and has mostly flat since 2017.


In reality, the stock didn't move. At all. Since $AJRD operates a healthy profitable business, one would assume any buyer would have to pay a premium in order to acquire. Yet nothing.

Anyone ever see anything like that before? I don't know if it's because the market doesn't believe the rumors or isn't paying attention because it's defense, but personally, I can't recall a buyout rumor ever be met with absolutely nothing.

I'm long calls, 2/19 and 5/21.
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