Lockheed Martin has announced its acquisition of Terran Orbital, a struggling spacecraft manufacturer, at an enterprise valuation of nearly $450 million. This deal comes after Lockheed’s previous bid of nearly $600 million in March, and will see Lockheed acquiring Terran at 25 cents a share in cash, paying off Terran’s debt, and establishing a $30 million capital facility. Terran’s stock closed at 40 cents a share, and the deal is expected to close in the fourth quarter, helping Terran avoid a cash-and-debt crisis, as it reported only $15 million in cash reserves and $300 million in debt at the end of July.
Terran Orbital, a small spacecraft maker that went public via a special purpose acquisition company in early 2022 at a $1.8 billion valuation, has been struggling due to the shifting risk environment in the market. Lockheed Martin, an existing stakeholder in Terran, has been an important customer for the company, accounting for 70% of its revenue in the second quarter. Terran signed a significant spacecraft production contract 18 months ago with Rivada Space Networks, worth $2.4 billion, but has recognized only $6.2 million from the deal in the first half of this year. As a result, Terran removed the Rivada deal from its total contract backlog, reducing its orders backlog by 88%.
Lockheed Martin’s acquisition of Terran Orbital is seen as a lifeline for the struggling spacecraft manufacturer, as it will provide much-needed capital and stability for the company to continue operations. The deal will allow Terran to avoid a cash-and-debt cliff that it is currently facing, with minimal cash reserves and significant debt. The acquisition by Lockheed Martin will help ensure Terran’s survival and provide a path forward for the company to navigate the challenges it has been experiencing in the space industry.
Terran’s reliance on Lockheed Martin as a significant customer highlights the importance of the relationship between the two companies. With 70% of Terran’s revenue coming from Lockheed Martin, the defense giant has played a crucial role in sustaining the spacecraft manufacturer’s operations. This acquisition further solidifies the partnership between the two companies and underscores Lockheed Martin’s commitment to supporting Terran through its challenges in the market.
Despite its struggles, Terran Orbital has shown promise in securing significant contracts, such as the $2.4 billion deal with Rivada Space Networks for 300 satellites. While the full potential of this contract has yet to materialize for Terran, the company’s focus on spacecraft production and partnerships with key customers like Lockheed Martin indicate a path towards growth and sustainability in the long term. Lockheed Martin’s acquisition of Terran will further strengthen the company’s position in the industry and enable it to capitalize on future opportunities for expansion and success.
Overall, Lockheed Martin’s acquisition of Terran Orbital represents a strategic move to support and strengthen the struggling spacecraft manufacturer. By providing much-needed capital, stability, and a lifeline for Terran to navigate its current challenges, the deal will ensure the company’s survival and create opportunities for growth and success in the future. The partnership between Lockheed Martin and Terran Orbital, along with their focus on spacecraft production and key contracts, positions both companies for continued collaboration and innovation in the evolving space industry.
