Rocket Lab acquires satellite separation tech maker

One month on from an acquisition, Rocket Lab has quickly identified a second transaction focused on the hardware aspects of deploying satellites from launch vehicles.

Rocket Lab said Monday it has agreed to buy Silver Spring, Maryland-headquartered Planetary Systems Corp. for $42 million in cash and stock. Based on Rocket Lab’s Monday closing stock price, that price could rise to $81.4 million if PSC meets certain financial milestones for 2022 and 2023.

PSC makes mechanical systems and dispensers that work to separate satellites and other spacecraft from launch vehicles. That 23-year-old company touts its hardware as being used on launch vehicles made by SpaceX and Northrop Grumman, as well as the United Launch Alliance -- the 50-50 joint venture backed by Boeing and Lockheed Martin.

All parties expect to close the transaction in the fourth quarter of this year.

Rocket Lab announced this transaction alongside its third quarter financial release, after which CEO Peter Beck explained the rationale behind the acquisition in a conference call with investors.

“We are excited about the cross-selling opportunities and combination of these leading spacecraft separation systems with our existing Electron launch services and other spacecraft components, our software and service offerings,” Beck said.

Electron is Rocket Lab’s flagship launch offering that focuses on small satellites and CubeSats, the latter of which are even smaller than many of those in the former group.

Beck added that by acquiring PSC, they “believe there are meaningful synergies that can be achieved post-acquisition, in shortening lead time, scaling production and driving cost to provide our customers with an even better service offering than they've had before.”

For Rocket Lab, this represents the company’s second purchase of another business in as many months and since the company undertook a direct listing of its stock in August through a merger with a special purpose acquisition company.

The idea behind merging with a SPAC was to gain access to additional cash and use its stock as currency for acquisitions.

In October, Rocket Lab acquired Advanced Solutions Inc. for a potential price of $45.5 million including earn-out payments to add more software used in platforms for mission simulation and testing among others.

Mike Whalen will continue to lead the 25-employee PSC team as its CEO with founder Walter Holemans also remaining in his role of chief engineer.

Also on Monday, Rocket Lab reported $5.3 million in third quarter revenue and a loss of $17.5 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

Rocket Lab reported revenue of $48 million in 2019 and $35 million in 2020. With the SPAC merger, Rocket Lab expects to hit sales of $749 million in 2025 with positive adjusted EBITDA of $119 million.