L3Harris Sells 60% Stake in Space Propulsion Business to AE Industrial for $845 Million
U.S. defense contractor L3Harris Technologies said on Monday it will sell roughly a 60% stake in its space propulsion and power systems business to private equity firm AE Industrial Partners for $845 million, including debt.
The transaction advances L3Harris’ strategy to scale back its exposure to space-related activities and sharpen its focus on defense capabilities, as rising geopolitical uncertainty drives increased demand for military technologies.
Separately, L3Harris announced it will reorganize its operations into three business segments, down from four, to better align its portfolio with what it described as the “future of warfare.” The new structure will consist of space and mission systems led by Sam Mehta, communications and spectrum dominance headed by Jon Rambeau, and missile solutions overseen by Ken Bedingfield.
“We’re now best poised to deliver the speed, technology and commerciality required by our most important customer – the warfighter,” said Chief Executive Christopher Kubasik.
Despite the divestment, L3Harris will retain full ownership of the RS-25 rocket engine, which is currently used in NASA’s Space Launch System for the Artemis program.
The deal with AE Industrial, first reported by Reuters on Sunday, is expected to close in the second half of 2026. AE Industrial said the partnership will also help accelerate the development of next-generation propulsion technologies, including nuclear propulsion systems viewed as critical for future Mars exploration missions.
AE Industrial’s previous investments in the space sector include Firefly Aerospace, RedWire Space, and York Space Systems.

