LHX Stock Takes Off After L3Harris Announces Rocket Motor Spin-Off With $1 Billion Pentagon Backing

• L3Harris said that the new company will convert the investment into common equity when the latter goes public later in 2026.
• The Department of War expects this investment to expand the production capacity of solid rocket motors, and it added that this is the first direct-to-supplier partnership of this kind.
• The company said that the DoW investment and sustained, long-term demand will help expand Missile Solutions’ capacity for DoW’s critical missile programs, such as PAC-3, THAAD, Tomahawk, and Standard Missile.

L3Harris Technologies Inc. (LHX) on Tuesday announced that the U.S. Department of War, also known as the Department of Defense, will invest $1 billion in the company’s rocket motor business.

According to L3Harris’ announcement, the firm will spin off its rocket motor business into a new publicly traded company backed by the $1 billion investment in convertible securities. L3Harris said that the new company will convert the investment into common equity when the latter goes public later in 2026.

L3Harris shares were up more than 11% in Tuesday’s pre-market trade before losing some steam to hover 3% higher at the time of writing. Retail sentiment on Stocktwits around the company trended in the ‘extremely bullish’ territory.

Spin-Off Details

L3Harris stated that with the proposed spin-off of its rocket motor business, the company intends to deliver critical propulsion systems at improved speeds and scale.

“This partnership positions the DoW and L3Harris to negotiate multi-year procurement framework agreements for solid rocket motors, vital to several critical munitions, pending Congressional authorization and appropriations,” said the Department of War in its announcement.

The DoW expects this investment to expand the production capacity of solid rocket motors, and it added that this is the first direct-to-supplier partnership of this kind.

Boosting L3Harris’ Capacity

L3Harris acquired Aerojet Rocketdyne in 2023 and has since invested in expanding the company’s production capacity. It recently created the Missile Solutions business, bringing together its capabilities in terms of offensive as well as defensive missile systems.

“We’re taking action to build today’s ‘Arsenal of Freedom’ by launching a pure-play missile solutions provider,” said Christopher Kubasik, Chairman and CEO, L3Harris.

The company said that the DoW investment and sustained, long-term demand will help expand Missile Solutions’ capacity for DoW’s critical missile programs, such as PAC-3, THAAD, Tomahawk, and Standard Missile.

LHX stock is up 19% year-to-date and 64% over the past 12 months.

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