Lockheed Martin Acquires Satellite Manufacturer Terran Orbital in a $450 Million Transaction

In a decisive move to rescue satellite producer Terran Orbital from its financial difficulties, Lockheed Martin has announced a take-private acquisition valued at $450 million, with the transaction expected to finalize by the year’s end. 

In this acquisition, Terran Orbital will be acquired at $0.25 per share by the defense behemoth, which will also take care of the company’s existing debt. Having previously acquired a 28.3% equity stake through various investments in 2017, 2020, and 2022 via the Lockheed Martin Ventures fund, this marks Lockheed Martin’s first full acquisition of a company from its venture portfolio since its establishment in 2007. Representing a significant portion of Terran’s revenue, Lockheed’s satellite bus contracts constitute around 70% of revenue and 91% of its backlog. 

A pivotal moment came for Terran Orbital at the start of 2023, following the announcement of a substantial $2.4 billion agreement to provide 300 satellites to Rivada Space Networks, aiming to develop a satellite communications network. Despite this, Rivada postponed its scheduled payments, prompting Terran Orbital to exclude the deal from its projected earnings, as disclosed in a recent financial statement. 

Lockheed’s initial offer in March to purchase Terran Orbital exceeded $500 million. In an attempt to fend off the acquisition, Terran Orbital employed a temporary shareholder rights plan, commonly referred to as a “poison pill”. Nonetheless, Lockheed retracted its offer by May.

As of July 31, Terran Orbital’s cash on hand had decreased to $14.6 million from $30.6 million at June’s end. On August 12, the company informed regulators of its examination of various strategic alternatives to bolster its cash position. At the closing of the market on Wednesday, shares of Terran Orbital were trading at $0.40 each. 

With its anticipated departure from public trading, Terran Orbital joins Astra Space as the second aerospace firm to transition back to private ownership after debuting with valuations over a billion dollars — $1.8 billion for Terran Orbital and $2.1 billion for Astra Space. By the time their transactions to return to private status were completed, both firms were valued substantially lower than their initial public offerings.