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US defence giant L3Harris Technologies has unveiled plans to create a new, publicly listed missile propulsion company, backed by a proposed US government investment, as Washington moves to rapidly expand missile production capacity for itself and its allies.
Under the proposal, L3Harris would establish a standalone Missile Solutions business focused on the manufacture of solid rocket motors and other critical propulsion systems used across a wide range of offensive and defensive missile programs. The move is designed to accelerate production at what the company described as “unprecedented speed and scale”, amid growing concerns over the resilience and capacity of the defence industrial base.
Central to the plan is a proposed US Department of War investment of US$1 billion (AU$1.5 billion), structured as a convertible preferred security. The investment would automatically convert to ordinary shares should the Missile Solutions business proceed to an initial public offering (IPO), which L3Harris intends to pursue in the second half of 2026.
If completed, the arrangement would be a first-of-its-kind partnership between the US government and a defence prime, reflecting a broader shift in US acquisition policy towards closer collaboration with industry to address production bottlenecks and supply chain vulnerabilities.
L3Harris said the new company would bring together all of its missile propulsion and related capabilities, building on its 2023 acquisition of Aerojet Rocketdyne. Since that takeover, the company has poured significant capital into modernising facilities and expanding output, positioning missile propulsion as a distinct business line.
The Missile Solutions arm would support a range of high-priority US and allied missile programs, including Patriot PAC-3 interceptors, THAAD missile defence systems, Tomahawk cruise missiles and the Standard Missile family used by naval forces.
L3Harris chair and chief executive Christopher Kubasik said the move was aimed at rebuilding what he described as a modern “arsenal of freedom”, echoing language used during periods of large-scale industrial mobilisation.
“Recent actions by the Trump administration have placed renewed emphasis on strengthening the defence industrial base and restoring competition after three decades of consolidation,” Kubasik said. “This new company builds on years of sustained investment and operational improvement and will be a key partner in efforts to deter and defeat America’s adversaries.”
Despite the proposed IPO, L3Harris would retain a controlling interest in the Missile Solutions business. The company said separating the unit was expected to unlock additional value for shareholders while sharpening strategic focus and accelerating growth in one of the most capacity-constrained segments of the global missile supply chain.
For allied nations, including Australia, the move is likely to be watched closely given the growing reliance on US-sourced missile systems and propulsion technologies, and ongoing concerns about production timelines and stockpile depth in a more contested Indo-Pacific security environment.
L3Harris plans to brief investors on the proposed government partnership and spin-off at a conference on 13 January 2026. JP Morgan Securities is acting as financial adviser on the transaction, with Vinson & Elkins providing legal advice.
The proposal remains subject to final approvals and market conditions but signals a significant shift in how the US government and major defence contractors are seeking to rebuild industrial capacity after decades of consolidation and underinvestment.
Stephen Kuper
Steve has an extensive career across government, defence industry and advocacy, having previously worked for cabinet ministers at both Federal and State levels.
