Rocket Lab to Acquire Iridium in an $8 Billion Cash and Stock Transaction
Rocket Lab announced today that it has entered into a definitive agreement to acquire Iridium Communications. Rocket Lab will acquire all the outstanding shares of Iridium common stock for $54 per share in a cash and stock deal. This represents an enterprise value for Iridium of approximately $8.0 billion.
Under the terms of the transaction, Iridium stockholders will receive $27.00 in cash and a number of shares of Rocket Lab common stock calculated pursuant to an exchange ratio (subject to a collar) for each share of Iridium common stock outstanding at the closing. The collar is banded from $67.50 to $112.50. The transaction has a notional value of $54.00 per share of Iridium common stock, implying an enterprise value for Iridium of approximately $8.0 billion. The transaction is expected to be completed in mid-2027, subject to the satisfaction of customary closing conditions, including approval of Iridium stockholders and required regulatory approvals.
The acquisition is the latest in a series of purchases by Rocket Lab as it builds scale to compete against larger rivals. Rocket Lab, best known for its small Electron launch vehicle, describes the transaction as creating a fully vertically integrated space company combining launch, manufacturing, and now a live global network. The move mirrors SpaceX's Starlink push, currently SpaceX's most profitable business.
Iridium provides communications services to over 2.5 million subscribers around the globe. Its users tap into a constellation of 66 low-Earth orbit satellites and L-band spectrum to maintain contact on ships, aircraft, and in other remote locations. Iridium partnered with SpaceX to launch its NEXT satellites in 2019.
In a video about the acquisition, Rocket Lab CEO Sir Peter Beck said the deal offers a shortcut for the company to build a satellite network. They have highly valuable spectrum, which is very difficult to come by, Beck said. They have millions of customers, and, of course, they're a trusted government provider. Beck added that it is a highly profitable business and that the company is not investing in hopes and dreams.
The acquisition will be one of the most transformative deals in the space industry, joining together two innovative American companies to play a leading role in the U.S. space economy. It merges Rocket Lab's leading launch capabilities and satellite manufacturing with Iridium's global satellite communications network, spectrum, and 500-plus strong partner ecosystem to create a competitive, vertically-integrated space company that designs, builds, launches, and operates its own constellations, delivering critical communications capability to millions of users worldwide.
Rocket Lab aims to build upon Iridium's network and help deploy its next generation of satellites, which will include direct-to-device services. The company says this capability will grow into an important new capability for U.S. national security and emergency response. The transaction represents a direct challenge to SpaceX, which dominates both launch and satellite communications through Starlink, and assembles an end-to-end space business at a speed most analysts did not expect from a company Rocket Lab's size.
"As the worlds of space and terrestrial communications continue to converge, more critical services will depend on space-based capabilities," said Matt Desch, CEO, Iridium. "Success will come from those who can bring new innovations to space quickly and sustain them over time as efficiently as possible. We're excited about being able to accelerate the next generation of IoT, aviation, maritime, PNT, and national security capabilities, and pursue new innovative applications as part of Rocket Lab - a fully integrated, end-to-end space company. That's an incredible opportunity for our customers, partners, employees, and stockholders."
As part of the transaction, Rocket Lab has received commitments for a $3.6 billion 364-day senior secured bridge term loan facility from Deutsche Bank and Wells Fargo. Rocket Lab intends to fund the cash component of the transaction through a combination of cash from its balance sheet and other debt and equity financing sources.