Lockheed Martin, a leading defense contractor, has recently announced its agreement to acquire satellite products maker Terran Orbital in a $450 million deal. This acquisition comes after Lockheed withdrew its previous bid to take Terran Orbital private.
This strategic move by Lockheed will see the company paying 25 cents per share in cash for Terran Orbital, a significant discount from the initial offer of $1 per share made in March. As a result of this news, Terran’s shares took a nosedive, plummeting nearly 41% to 24 cents on the New York Stock Exchange.
Lockheed’s interest in Terran Orbital dates back to 2017 when the defense giant invested in Terran’s Series A round. With Lockheed being Terran’s largest customer and currently utilizing the company’s satellite bus for the U.S. Space Development Agency’s transport and tracking layer programs, the acquisition makes sense from a strategic standpoint.
Analysts at Jefferies noted that the acquisition will consolidate a supplier for Lockheed, positioning Terran Orbital to provide buses for Lockheed’s prime position on the SDA’s Tracking and Transport layer.
Terran Orbital, based in Florida, specializes in satellite design, production, launch planning, mission operations, and on-orbit support for aerospace and defense clients. The transaction between Lockheed and Terran Orbital is expected to close in the fourth quarter, with plans to retire Terran’s existing debt and establish a new $30 million working capital facility.
Despite posting a quarterly net loss of $35.4 million recently, Terran has been facing several quarters of losses since going public in 2022. However, this acquisition by Lockheed could potentially turn their fortunes around.
Earlier this year, Lockheed was awarded a significant contract worth $890 million, with partners L3Harris Technologies and Sierra Space, to deliver 18 satellites to the SDA as part of its missile tracking program. This latest move to acquire Terran Orbital further solidifies Lockheed’s position in the aerospace and defense industry.
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