The deal, which may come late this week or early next week according to one of the sources, represents part of the diversified U.S. conglomerate's efforts to divest non-core units and focus on closing its $16.5 billion acquisition of aircraft component maker Goodrich Corp (GR.N).

The companies are still working out final details of the transaction and the talks could still fall apart, the people cautioned, asking not to be identified because the matter is not public.

United Tech declined to comment, while GenCorp was not immediately available for comment.

Rocketdyne, the world's largest manufacturer of liquid-fueled rocket propulsion systems, has been facing an uncertain outlook following the end of the U.S. space shuttle program last year, and industry executives have said consolidation is needed for the space industry to survive a tough environment.

The sale would come more than seven years after United Tech bought Rocketdyne from Boeing Co (BA.N) for $700 million in cash.

Rocketdyne makes liquid rocket motors to launch satellites into space but has also begun to diversify into solar and gasified coal energy technologies. GenCorp's Aerojet subsidiary and Alliant Techsystems (ATK.N) produce solid rocket motors.

Several people familiar with the process told Reuters previously that United Tech had received multiple bids for the Rocketdyne business in late March, with GenCorp and private equity firms among interested parties.

(Reporting by Andrea Shalal-Esa in Washington and Soyoung Kim in New York; editing by Carol Bishopric)

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