(June 29): Rocket Lab Corp agreed to buy Iridium Communications Inc, a pioneer in satellite telephones, for US$54 a share in a cash-and-stock transaction as smaller players in the orbital economy try to catch up with market leader Space X.
The move will combine Rocket Lab’s launch capabilities and satellite manufacturing with Iridium’s low-Earth orbit network. Iridium shareholders will receive US$27 in cash and a number of shares of Rocket Lab common stock calculated pursuant to an exchange ratio, according to a statement Monday. The deal puts the satellite communications company at about US$8 billion in enterprise value.
Iridium shares rose as much as 22% in premarket trading Monday, while Rocket Lab shares rose about 10%. Rocket Lab went public in August 2021, and this is its biggest purchase to date.
Long Beach, California-based Rocket Lab said the move aims to create a “competitive, vertically integrated space company that designs, builds, launches and operates its own constellations, delivering critical communications capability to millions of users worldwide”. Last week, Nasa selected Rocket Lab for three launches starting early next year.
The Iridium deal gives Rocket Lab a foothold in the emerging market of direct-to-device, it said, providing satellite service to smartphones and other equipment. The competitive market for satellite-based navigation has heated up, with Elon Musk’s Starlink taking a commanding lead in recent years with a constellation of thousands of machines.
In April, Amazon.com Inc announced plans to buy Globalstar Inc in a US$11.6 billion deal to ramp up competition with Starlink. Amazon’s satellite initiative, called Amazon Leo, is in beta testing with commercial customers, ahead of the planned start of widespread service later this year.
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Rocket Lab is second to SpaceX in the number of missions by US-based companies. Its next rocket, the Neutron, is behind schedule and will be smaller than the Falcon 9.
Together, Rocket Lab and Iridium will “pioneer next-generation space applications and deliver sought-after capabilities to existing and new customers", Peter Beck, Rocket Lab’s CEO and founder, said in the statement.
Rocket Lab said it expects the deal to close in mid-2027. Deutsche Bank Securities is serving as lead financial adviser, and Wells Fargo and PJT Partners are serving as financial advisers to Rocket Lab. There is a termination fee of about US$224 million.
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