Lockheed Martin to Acquire Terran Orbital in $450 Million Deal

Lockheed Martin has announced it is set to acquire small satellite manufacturer Terran Orbital. This acquisition, valued at $450 million, comes months after Lockheed dropped earlier plans to purchase the company.

The terms of the deal indicate that Lockheed Martin will buy Terran Orbital at $0.25 per share in cash while also retiring the company’s existing debt. This acquisition is anticipated to close in the fourth quarter of this year. Notably, the offer price is a significant markdown from Terran Orbital’s closing price of $0.40 per share on August 14.

Lockheed Martin, which already owns a third of Terran Orbital through previous investments, has a well-established strategic partnership with the company. Terran Orbital has been supplying small satellite buses for Lockheed's projects, including contracts with the Space Development Agency. The acquisition is seen as a natural extension of this collaboration.

“We’ve worked with Terran Orbital for more than seven years on a variety of successful missions. Their capabilities, talent, and business momentum align with Lockheed Martin Space’s strategic plans, and we’re looking forward to welcoming them to our team.” - Robert Lightfoot, President of Lockheed Martin Space

Despite the acquisition, Lockheed Martin assured that Terran Orbital would continue to operate as “a commercial merchant supplier to industry” of small satellite systems. However, it is worth noting that Terran Orbital disclosed in recent filings with the Securities and Exchange Commission (SEC) that more than 90% of its funded contract backlog is tied to Lockheed Martin. This excludes a significant $2.4 billion contract awarded to Terran Orbital a year and a half ago to build a 300-satellite constellation for Rivada Space Networks.

“This move will open new opportunities for growth and innovation, and we couldn’t be more excited about the future. Access to Lockheed Martin’s incredible engineers and world-class facilities will only accelerate our business plan to provide low-cost, high-value solutions to our ever-growing customer base.” - Marc Bell, Chief Executive of Terran Orbital

This acquisition marks a significant shift from Lockheed’s initial attempt to purchase Terran Orbital earlier this year. Initially, Lockheed had proposed acquiring the company at $1 per share, including stock warrants and assuming $313 million in debt. At the time, Lockheed highlighted that “Terran’s superior capabilities and business momentum align with one of Lockheed Martin Space’s strategic growth priorities and the Transaction would accelerate that strategy.” However, two months later, Lockheed withdrew the offer without providing specific reasons but maintained its strategic partnership with Terran Orbital.

Since the collapse of the initial deal, Terran Orbital has been navigating financial difficulties. In an August 12 SEC filing, the company revealed it was exploring various strategic options to address near-term capital needs, including taking on more debt, selling the company, or pursuing other strategic transactions. The filing also disclosed that as of the end of July, Terran Orbital had only $14.6 million in cash and equivalents, a sharp decline from $30.6 million at the end of June.

This acquisition underscores Lockheed Martin's commitment to strengthening its foothold in the small satellite market and expanding its capabilities in space systems. As the deal progresses towards closing, the industry will be watching closely to see how this acquisition will impact the broader space and satellite sectors.