Lockheed Martin is set to acquire Terran Orbital, a move that will take the struggling spacecraft manufacturer private in a deal valued at approximately $450 million. Announced on Thursday, the acquisition reflects a decrease from Lockheed’s previous bid of nearly $600 million in March.
Under the agreement, Lockheed Martin will purchase Terran Orbital’s outstanding common stock at 25 cents per share in cash. In addition to this, Lockheed will assume responsibility for Terran’s debt and establish a $30 million capital facility to support the company’s operations until the deal is finalized. This acquisition is expected to close in the fourth quarter of the year.
The transaction comes at a critical time for Terran Orbital, which is facing significant financial challenges. As of the end of July, the company reported cash reserves of less than $15 million and is burdened with approximately $300 million in debt. Terran’s stock, which closed at 40 cents per share on Wednesday, has been under pressure since the company went public in early 2022 via a special purpose acquisition company (SPAC) at a $1.8 billion valuation.
Terran Orbital, like many other space-related companies that recently entered the public market, has struggled in the current risk-averse investment environment. Lockheed Martin, already a major stakeholder and key customer, accounts for 70% of Terran’s $30.4 million in revenue during the second quarter.
A significant challenge for Terran has been the delayed realization of revenue from a $2.4 billion contract signed 18 months ago with Rivada Space Networks for the production of 300 satellites. Despite the size of the contract, Terran has only recognized $6.2 million in revenue from the deal in the first half of this year. On Monday, the company removed the Rivada contract from its backlog, reducing its total contract orders by 88%, from $2.7 billion to $312.7 million. Notably, 91% of Terran’s remaining contracts are linked to Lockheed Martin programs.
This acquisition underscores Lockheed Martin’s strategic interest in consolidating its position in the space industry, leveraging its existing relationship with Terran Orbital to ensure the continuation of crucial programs and enhance its capabilities in the spacecraft manufacturing sector.