Space SPACs could prompt new wave of acquisitions
NATIONAL HARBOR, Md. — The current wave of space startups going public through mergers with special-purpose acquisition companies (SPACs) might lead to a round of industry consolidation as they snap up suppliers to obtain their technologies or personnel.
Speaking at a Sept. 9 panel during the Satellite 2021 conference, Chris Kemp, chief executive of small launch vehicle developer Astra, said he expected companies like his that have gone public through SPACs will use their capital and stock to spark a wave of acquisitions.
He went so far to suggest it would change the conference itself. “This is the last Satellite conference that will be like this,” he said, referring to the exhibit hall with dozens of companies that sell components for prime contractors. “A dozen companies just went public and all have billions of dollars. Every smart person, every brilliant technology downstairs is going to be bought by one of these companies, and all of these great technologies and all these great products are not going to be available to the primes.”
“This is a huge deal that will have a massive implication for a decade for the satellite industry,” he said.
In a Sept. 8 earnings call, Peter Beck, chief executive of Rocket Lab, said his company is considering several potential deals like its purchase of smallsat component supplier Sinclair Interplanetary in early 2020. “We have sufficient dry powder to really expand the team,” he said. “The kinds of acquisitions we are looking for and are pursuing are ones that grow our position very strategically.”
Beck didn’t discuss any specific companies, or types of companies, Rocket Lab was investigating. Instead, he said the company was looking for companies that give it the ability to “create new technologies and compete in the marketplace more aggressively.”
“The interesting thing about this market right now is that does feel like it’s ripe for consolidation,” said Adam Spice, Rocket Lab’s chief financial officer. He said the company had a “half a dozen or so” deals under consideration, such as smaller suppliers that are “reasonably integratable” for a larger company like Rocket Lab.
Some are less convinced a wave of acquisitions are imminent. “There’s always the questions of when you think the consolidation will happen and where are the acquisitions,” said Michael Collett, managing partner of Promus Ventures, a fund that has invested in several space companies. “We just haven’t seen a lot in space.”
The companies going public through SPACs could change that, at least somewhat, but he doubted that would extend to “legacy” space companies. “Space is having its moment,” he said. “Traditionally, people who weren’t acquisitive may change.”
Some companies might be wary of selling to early-stage startups that have gone public through SPACs, given the uncertainty of that company’s long-term prospects. “I don’t think a SPAC stock will be a good acquisition vehicle in many cases because a company hasn’t been proven out,” said J. Armand Musey, president and founder of Summit Ridge Group. “If you’re a company that’s thinking about selling out, taking stock in a company that has never launched a satellite and whose valuation is based on launching every single day is hard to do.”