Terran Orbital to be Acquired by Lockheed Martin in $450 Million Deal
- Lockheed Martin is buying Terran Orbital, the company announced Thursday.
- In March, Lockheed had bid for Terran at a higher enterprise valuation, but the agreement will now see Lockheed acquire Terran at a valuation of nearly $450 million, below their previous bid.
- The deal, expected to close in the fourth quarter, would aid Terran in avoiding a cash-and-debt crisis.
The defense giant announced on Thursday that it had reached a deal to buy the struggling spacecraft manufacturer.
Nearly $450 million is the enterprise valuation for Terran, which Lockheed will acquire, below its previous bid of nearly $600 million in March.
Lockheed will acquire Terran Orbital's outstanding common stock at 25 cents a share in cash, pay off Terran's debt, and establish a $30 million capital facility to keep the company going while the deal closes.
Terran's stock closed at 40 cents a share on Wednesday.
The deal, expected to close in the fourth quarter, would aid Terran in avoiding a cash-and-debt cliff that the company is currently facing. According to a filing on Monday, Terran's cash reserves were less than $15 million at the end of July, and the company also has approximately $300 million in debt.
In early 2022, the small spacecraft maker went public through a special purpose acquisition company at a $1.8 billion valuation. However, like other space stocks that debuted recently, the unprofitable company has been negatively impacted by the changing market risk environment.
Terran Orbital has Lockheed Martin as a significant stakeholder, having purchased shares during the company's SPAC process and again in late 2022. Additionally, Lockheed Martin is a crucial customer for Terran, accounting for 70% of Terran's $30.4 million in revenue during the second quarter.
Despite signing a $2.4 billion spacecraft production contract with Rivada Space Networks 18 months ago for 300 satellites, Terran has yet to see any significant financial benefits from the deal, with the company reporting that it recognized only $6.2 million from the agreement in the first half of this year.
On Monday, Terran announced that it was removing the Rivada deal from its total contract backlog, resulting in a 88% reduction in the backlog of orders from $2.7 billion to $312.7 million. Additionally, 91% of Terran's non-Rivada contracts are "programs associated with Lockheed Martin."
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