WASHINGTON — Lockheed Martin is buying smallsat manufacturer Terran Orbital, months after the company dropped earlier plans for an acquisition.
Lockheed said Aug. 15 it would buy Terran Orbital for $0.25 per share in cash and retire the company’s existing debt. The deal, expected to close in the fourth quarter, has an enterprise value of $450 million. Shares in Terran Orbital closed Aug. 14 at $0.40.
Lockheed already owns one third of Terran Orbital from past investments and has a strategic partnership, buying smallsat buses from the company for use on Lockheed programs such as Space Development Agency contracts.
“We’ve worked with Terran Orbital for more than seven years on a variety of successful missions,” Robert Lightfoot, president of Lockheed Martin Space, said in a statement. “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.”
Lockheed said that Terran Orbital will continue to be “a commercial merchant supplier to industry” of small satellite systems. However, Terran Orbital said in recent Securities and Exchange Commission filings that Lockheed accounted for more than 90% of its funded backlog of contracts, which now excludes a $2.4 billion contract Terran Orbital won 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,” Marc Bell, chief executive of Terran Orbital, said in the statement. “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.”
The deal comes nearly six months after Lockheed first proposed to acquire Terran Orbital. At the time, it was offering $1 per share of Terran Orbital stock it did not already own, plus buying stock warrants and taking over $313 million in debt. “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,” Lockheed said in a letter proposing the deal.
Two months later, though, Lockheed Martin said it had withdrawn the offer. Lockheed did not disclose why it abandoned the deal but said it would continue its strategic partnership with Terran Orbital.
Since then, Terran Orbital said it was continuing to explore strategic alternatives as the company faced financial pressure. In an Aug. 12 SEC filing, the company said it was examining a range of strategic options to address near-term capital needs, including taking on more debt, a sale of the company or some other strategic transaction. That filing noted that, as of the end of July, it had just $14.6 million of cash and equivalents on hand, down from $30.6 million at the end of June.
