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Rocket Lab to Acquire Iridium Communications in $8 Billion Cash-And-Stock Deal

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Rocket Lab to Acquire Iridium Communications in $8 Billion Cash-And-Stock Deal

Rocket Lab (RKLB) agreed to acquire satellite communications provider Iridium Communications (IRDM) in a cash-and-stock deal worth about $8 billion to create a vertically-integrated space company.

Shareholders of Iridium will receive $27 in cash for each share owned, along with Rocket Lab's stock, valuing the transaction at about $54 per share, the companies said in a joint statement on Monday.

The transaction combines Rocket Lab's launch capabilities and satellite manufacturing with Iridium's satellite communications network and spectrum holdings to establish a space company that designs, builds, launches and operates its own constellations, the companies said.

Iridium's stock jumped 21% in Monday trading, while Rocket Lab climbed 7.4%.

"This is a defining moment for the space industry and the start of a new era of strategic, accelerated growth for Rocket Lab and Iridium," Rocket Lab Chief Executive Peter Beck said in the statement. The deal is expected to allow the companies to "unlock entirely new markets," according to Beck.

The acquisition offers Rocket Lab immediate access to a constellation of low Earth orbit satellites, in line with its vision to expand beyond launch services and spacecraft manufacturing.

The company estimates the deal to be "significantly" accretive to its profitability and cash flow generation.

The transaction, which requires approval from Iridium's investors and clearance from regulators, is expected to complete in the middle of next year.

"As the worlds of space and terrestrial communications continue to converge, more critical services will depend on space-based capabilities," Iridium CEO Matt Desch said. "We're excited about being able to accelerate the next generation of (Internet of Things), aviation, maritime, (positioning, navigation, and timing), and national security capabilities, and pursue new innovative applications as part of Rocket Lab."

Rocket Lab said it has secured commitments for a $3.6 billion loan facility for the deal.

In May, Rocket Lab reported a first-quarter net loss that narrowed from the year before, while revenue increased to $200.3 million from $122.6 million. A month earlier, Iridium recorded an annual decline in its first-quarter net income, while revenue grew.

Price: $91.50, Change: $+6.96, Percent Change: +8.23%

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