Rocket Lab, 80shares surge on announcement of Iridium acquisition for billion dollars24%
Rocket Lab 80announced it would acquire satellite operator Iridium for billion dollars in a cash-and-stock 50deal50, sending its shares 24% higher. Iridium’s 66orbital satellites and 2,550,000subscribers are the core assets of the transaction. However, some pointed out that the deal represents an enterprise value of 82times revenue.
Rocket Lab 80announced its acquisition of Iridium Communications for billion dollars on 7 and 4, sending its shares up 24% that same day. The move reflected investors’ attention to the potential expansion of the company’s business scope.
The company said it would pay the acquisition price in a cash-and-stock 50deal50. The transaction structure combines a cash burden with stock dilution.
Iridium has 66satellites in orbit and frequency bands (spectrum), as well as 2,550,000subscribers. The company said these assets would contribute to recurring revenue and cash flow.
Rocket Lab has so far been known primarily for launch services and small satellite manufacturing. Through this acquisition, it is pursuing a shift in its business structure to strengthen satellite operations and subscriber-based services.
The market reaction was immediate. While the stock price rose sharply over a short period after the disclosure was announced, some analysts urged caution, questioning the company’s enterprise value measured in multiples of revenue.82times-level enterprise value and advised caution.
The company said it would continue to disclose additional details related to the acquisition, such as the regulatory approval schedule and integration plan. The timing of the transaction’s completion and its final terms are expected to be disclosed later.
Sources: The Motley Fool
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