Lockheed Martin has announced that it will be acquiring Terran Orbital, a struggling spacecraft manufacturer, in a deal valued at nearly $450 million. This acquisition will take Terran Orbital private and help the company avoid financial difficulties, as it was facing a cash and debt cliff with cash reserves of less than $15 million and debts totaling around $300 million. Lockheed Martin had previously bid nearly $600 million for Terran in March, but the final agreement will see them acquire Terran’s outstanding common stock at 25 cents a share in cash, pay off its debt, and establish a $30 million capital facility to support the company during the transition.
The deal is expected to close in the fourth quarter and will provide Terran with much-needed financial stability. Terran had gone public via a special purpose acquisition company in early 2022 at a valuation of $1.8 billion, but like many other space stocks, it had struggled in the market. Lockheed Martin is already a significant stakeholder in Terran Orbital, having previously invested during the company’s SPAC process and again in late 2022. Additionally, Lockheed Martin is an important customer for Terran, accounting for 70% of the company’s revenue during the second quarter.
One of Terran’s significant contracts was with Rivada Space Networks, a satellite communications operator, for the production of 300 satellites worth $2.4 billion. However, this deal has yet to generate substantial revenue for Terran, as the company reported just $6.2 million from the Rivada agreement in the first half of the year. As a result, Terran announced that it was removing the Rivada deal from its total contract backlog, reducing the backlog of orders by 88% to $312.7 million. Despite this setback, 91% of Terran’s non-Rivada orders are associated with Lockheed Martin, highlighting the close relationship between the two companies.
The acquisition of Terran Orbital by Lockheed Martin represents a strategic move for the defense giant to expand its presence in the space industry. Lockheed Martin’s investment in Terran, both as a stakeholder and a customer, demonstrates its confidence in the company’s potential and expertise in spacecraft manufacturing. By providing Terran with financial support and stability, Lockheed Martin aims to strengthen its position in the market and capitalize on emerging opportunities in the space sector.
With the deal expected to close in the fourth quarter, Terran Orbital will benefit from Lockheed Martin’s resources, expertise, and market influence. The acquisition will enable Terran to navigate its current financial challenges and position itself for future growth and success in the space industry. As a key player in the defense and aerospace sectors, Lockheed Martin’s acquisition of Terran Orbital underscores its commitment to innovation and expansion in the evolving space market, signaling a promising future for both companies.
