Rocket Lab Corp. announced on Monday plans to acquire Iridium Communications Inc. in a cash and stock deal representing an enterprise value of approximately $8 billion. The acquisition aims to unlock synergies of vertical integration by combining Rocket Lab's launch and satellite manufacturing capabilities with Iridium's global satellite communications network. The deal creates a vertically integrated space company that designs, builds, launches and operates its own satellite constellations, while eliminating third-party launch costs for future constellation deployments.
Rocket Lab Combines Launch Capabilities With Iridium Satellite Network
Rocket Lab stated the acquisition will combine its launch and satellite manufacturing capabilities with Iridium's global satellite communications network and L-band spectrum. The company said the deal gives it an immediate foothold in space-based applications, including satellite internet of things, direct-to-device communications, positioning, navigation and timing services, while adding a recurring revenue business.
"By marrying Iridium's deep heritage, trusted infrastructure, and highly sought-after spectrum with Rocket Lab's extensive and proven launch and manufacturing capabilities, we have the capability to unlock entirely new markets," said Rocket Lab CEO Peter Beck.
Rocket Lab also stated that owning Iridium's network is expected to eliminate third-party launch costs for future constellation deployments and replenishment. "Rather than simply continuing the Iridium network, Rocket Lab will build upon it to scale into untapped markets and pioneer new space-based services to the benefit of global customers," Rocket Lab said.
Iridium Shareholders To Receive $54 Per Share in Cash and Stock
Under the agreement, Iridium shareholders will receive $27 in cash and Rocket Lab shares for each Iridium share they own. The stock portion will be determined by an exchange ratio subject to a collar based on Rocket Lab's share price.
Rocket Lab will acquire all the outstanding shares of Iridium for $54 in cash and stock, representing a premium of 24% to Friday's closing price of Iridium shares.
Boards Approve Transaction With $3.6 Billion Bridge Loan Secured
The transaction has been unanimously approved by the boards of both companies. Rocket Lab stated it has secured commitments for a $3.6 billion bridge loan facility from Deutsche Bank and Wells Fargo to help fund the cash portion of the acquisition.
FAQ
What is the enterprise value of Rocket Lab's acquisition of Iridium Communications?
Rocket Lab announced the acquisition represents an enterprise value for Iridium of approximately $8 billion.
How much will Iridium shareholders receive per share in the Rocket Lab acquisition?
Iridium shareholders will receive $54 per share in cash and stock, consisting of $27 in cash and Rocket Lab shares determined by an exchange ratio subject to a collar based on Rocket Lab's share price. This represents a 24% premium to Friday's closing price of Iridium shares.
What financing has Rocket Lab secured for the Iridium acquisition?
Rocket Lab has secured commitments for a $3.6 billion bridge loan facility from Deutsche Bank and Wells Fargo to help fund the cash portion of the acquisition.
