Lockheed to acquire spacecraft maker Terran Orbital

Lockheed Martin has agreed to acquire Terran Orbital, approximately six months after the global defense giant withdrew a prior bid to take the spacecraft manufacturer private.

The agreement announced Thursday will see Lockheed pay approximately $51 million in cash for Terran Orbital, or 25 cents per share in cash, while the enterprise transaction value becomes $450 million after factoring in Terran Orbital's debt that Lockheed will retire. The latter's stock closed at 40 cents per share on Wednesday.

All parties involved expect the transaction to close in the fourth quarter of this year, after which the plan is for Terran Orbital to remain a commercial merchant supplier for other aerospace-and-defense companies.

Lockheed owns approximately one-third of Terran Orbital from past investments including through the Lockheed Martin venture capital fund. Lockheed is also Terran Orbital's largest customer. Lockheed's prior offer put a $1-per-share valuation on Terran Orbital, which has been examining strategic alternatives for itself over the past several months including a potential sale.

Regulatory filings indicate that Lockheed programs make up for at least 80% of Terran Orbital's funded contracts backlog and 70% of the its $30.4 million in second quarter revenue.

Lockheed Martin Ventures first backed Terran Orbital in 2017 and a pair of additional investments followed in 2020 and 2022. This represents the first ventures portfolio company Lockheed has agreed to acquire since the fund's launch in 2007.

"We've worked with Terran Orbital for more than seven years on a variety of successful missions," Robert Lightfoot, president of Lockheed's space segment, said in a release. "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. Our customers require advanced technology and even faster product development, and that's what we can achieve together."

Terran Orbital's satellite buses play a role in Lockheed's offerings for the Space Development Agency's Proliferated Warfighter Space Architecture program, along with several other self-funded technology demonstrations.

SDA is setting up PWSA as a constellation of hundreds of smaller satellites in-orbit supplied by multiple companies.

The agency is splitting up PWSA into several tranches with different layers for different missions, such as the tracking of missile launches and warnings of them as they happen. Lockheed is a prime contractor for Tranches 0 through 2

For Terran Orbital, the transaction would end its two-year-run as a public company following its early 2022 merger with a special purpose acquisition company. The company has yet to turn a profit and reported $300 million in debt on its books as of July's end with $15 million in cash reserves.