Monday, September 30th, 2024
Lockheed Martin (“Lockheed”) has announced the signing of an agreement to acquire Terran Orbital (“Terran”) for $0.25 per share. The deal has an enterprise value $450 million and is set to close in the fourth quarter. Terran is a leading manufacturer of satellite products primarily serving the aerospace and defense industries.
Lockheed already holds 28.3% of Terran after investing through its venture capital arm, Lockheed Martin Ventures in 2017, 2020 and 2022. Terran will be the first portfolio company that the fund acquires since it was founded in 2007 however, this was not Lockheed’s first attempt at acquiring its supplier. Nearly six months ago Lockheed attempted to acquire Terran for $1 per share, but Terran responded by introducing a shareholder rights plan or “poison pill” to ward off the takeover.
Lockheed is no stranger to doing business with Terran, as Lockheed has been purchasing smallsat busses from Terran for use on programs such as Space Development Agency contracts. Before the announcement, Lockheed was already funding more than 90% of Terran’s contract backlog, making this acquisition a nice fit for Lockheed’s long term strategic plan. Moving forward, the deal should benefit both parties as Terran will have access to Lockheed Martin’s incredible engineers and world class facilities, and Lockheed can bring a major supplier in -house to vertically integrate its supply chain. The transaction also allows for the creation of a $30 million working capital facility that will alleviate the stress on Terran after its cash reserves dropped to just $14.6 million as of July 31, 2024.
Author: Griffin James, 2024-2025 Articling Students
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