Lockheed Martin to Acquire Terran Orbital in $450 Million Deal

Lockheed Martin He buys Earth orbitThe defense giant has reached an agreement to take its troubled spacecraft maker private, the company announced Thursday.

Under the agreement, Lockheed will acquire Terran for an enterprise valuation of about $450 million, lower than Lockheed’s previous offer of about $600 million in March.

Lockheed will purchase Terran Orbital’s outstanding common stock for 25 cents per share in cash. In addition, Lockheed will pay down Terran’s debt and establish a $30 million capital facility to keep the company going while the transaction closes.

Terrain stock closed at 40 cents a share on Wednesday.

The deal is expected to close in the fourth quarter and should help Terran avoid the company’s cash and debt cliff. Terran had less than $15 million in cash reserves at the end of July, the company said in its filing. file On Monday, it also has debts of about $300 million.

The small spacecraft maker went public through a special purpose acquisition company in early 2022 at a valuation of $1.8 billion. Like many other space stocks that have debuted in the past few years, the yet-to-be-profitable company has been hit hard by the changing risk environment in the market.

Lockheed Martin is already a significant shareholder in Terran Orbital, having bought a stake in the company during the company’s SPAC and again in late 2022. Lockheed Martin is also a significant Terran customer, accounting for 70% of Terran’s $30.4 million in revenue during the second quarter.

Terran signed a massive spacecraft production contract 18 months ago with Rivada Space Networks, worth $2.4 billion for 300 satellites. But the deal hasn’t generated any significant money for Terran, which reported receiving just $6.2 million from the Rivada agreement in the first half of this year.

On Monday, Terran announced that it had removed the Rivada deal from its backlog of contracts—reducing its backlog of orders by 88 percent, from $2.7 billion to $312.7 million. Of its non-Rivada orders, 91 percent of Terran’s contracts are “Lockheed Martin-related programs.”