Starbridge Weekly Space Update for 12/19/2022

Portfolio Company News

SpaceX

 

Axiom

 

General Space News

Advent buying Maxar

Advent International, a private equity firm that seeks “to invest in well-positioned companies with operational and strategic improvement potential” with $89B AUM, is offering a 129% premium for Maxar, a space infrastructure and Earth intelligence company best known for its imagery of the conflict in Ukraine. 

The $53/share purchase price represents a 129% premium to the prior closing price of $23.10 and a 34% premium to the prior 52-week high. This values Maxar at an enterprise value of $6.4BB, with Maxar holding $2.17BB of long-term debt and $22MM of short-term debt as of the end of Q3. Based on revenue and EBITDA estimates, the deal is valued at 3.3X 2023 EV/Sales and 12.1X EV/EBITDA.

The deal includes a 60-day "go-shop" period expiring February 14, 2023. The deal is expected to close in mid-2023, following regulatory and shareholder approval.

In the press release by Maxar, Advent indicated that its rationale was Maxar’s position in the market and the limitations on its potential by being public. Advent says that post-merger, “Maxar will benefit from the significant resources, operational expertise, and capacity for investment provided by Advent. As a private company, Maxar will be able to accelerate investments in next-generation satellite technologies and data insights that are vital to the Company’s government and commercial customers, as well as pursue select, strategic M&A to further enhance the Company’s portfolio of solutions.”

 

L3Harris buying Aerojet

Much pursued Aerojet has agreed to be purchased by L3Harris at a purchase price of $58/share which, including debt, estimates the value of the entire deal at $4.7B. Aerojet makes liquid- and solid-fueled propulsion products for space and munitions applications. Its space focused products include the SLS’s RS-25 engines, the Orion spacecraft’s main engine, the RL-10, and in-space electric propulsion products. 

L3Harris’ rationale for the deal is the increasing demand for munitions and systems from the Department of Defense. The deal, expected to close mid-2023, is financed by L3Harris from existing cash on hand and new debt.

Aerojet has had recent offers from both Lockheed Marting and GE. The FTC blocked a $4.4B takeover bid from Lockheed Martin ($LMT), saying the merger could inflate the cost of rocket engines for other contractors or even lock out their access to the supplier. Reports of GE’s interest provided no details on their offer. 

Courtesy of the team at Payload, we are reminded of the State of Competition within the Defense Industrial Base and its conclusions. There were 51 prime contractors in the ’90s. Now, there are five: Lockheed Martin (NYSE:LMT), Raytheon (NYSE:RTX), General Dynamics (NYSE:GD), Northrop Grumman (NYSE:NOC), and Boeing (NYSE:BA). While the space sector has become much more dynamic, the rest of the defense sector has continued to ossify. It will be interesting to see if companies such as Anduril provide a solution to the problem. From the report above:

National Space Council/Office of Science and Technology Policy

The White House released two important announcements today: the new appointees to the National Space Council Users Advisory Group and the National In-space Servicing, Assembly, and Manufacturing Implementation Plan

These announcements, the FCC’s announcement of a Notice of Proposed Rule Making for updating its satellite application process, and bills proposed by Congress demonstrate significant regulatory changes starting in January as the 118th Congress begins. 

 

Hedron

Hedron, originally Analytical Space, was reorganized, refinanced, and senior staff remixed late last year. The new COO, Katharine Monson, sat down with Payload and outlined their plans for a high-speed, low-latency relay network. 

 

Other Space News