Rendering of SmallSAT GEO Photo: Terran Orbit

Lockheed Martin on Thursday said it has agreed to acquire satellite manufacturer Terran Orbital in a $450 million deal based on enterprise value, a bargain versus the $606 million unsolicited proposal the aerospace and defense giant made in March.

Announcement of deal follows Terran’s disclosure on Monday that it has removed from its backlog more than $2 billion related to an earlier agreement to build satellites for Germany’s Rivada Space Networks. At the end of June, Terran’s backlog stood at $312.7 million, 91% of which is work with Lockheed Martin, versus $2.7 billion a year ago.

The pending deal will complement Lockheed Martin’s existing spacecraft business and strengthen its supply chain by bringing a supplier in-house.

Terran’s largest customer is Lockheed Martin, which relies on the spacecraft company to make its satellite busses for its work with the Space Development Agency’s Proliferated Warfighter Space Architecture. Lockheed Martin also owns about 30% of Terran through previous investments through previous investments by the company’s venture capital unit.

Through June, Terran has generated $57.6 million in sales so far in 2024, with Lockheed Martin accounting for 71% of the revenue and Rivada 11%. No other customer accounted for more than 10% of Terran’s sales through June.

“We’ve worked with Terran Orbital for more than seven years on a variety of successful missions,” Robert Lightfoot, president of Lockheed Martin Space, said in a statement. “Their capabilities, talent and business momentum align with Lockheed Martin Space’s strategic plans, and we’re looking forward to welcoming them to our team. Our customers require advanced technology and even faster product development, and that’s what we can achieve together.”

Terran in July received the certificate for occupancy for its new 94,000 square foot satellite manufacturing facility in Irvine, Calif., a key milestone on the path to opening. The company says the new facility will allow it to produce and test satellites at a faster rate to meet customer demands for responsive space missions.

The companies said that Terran will remain a commercial merchant supplier of spacecraft to industry.

Lockheed Martin will pay 25 cents in cash for each outstanding share of Terran’s common stock and retire the company’s debt. Lockheed Martin’s buyout offer in March was for $1 per share plus debt retirement. The agreement also incudes Lockheed Martin and other Terran creditors establishing a $30 million working capital facility to help support operations until the deal closes.

The transaction is expected to close in the fourth quarter pending approvals by regulators and Terran’s shareholders. Terran has about 650 employees.

This story was first published by Defense Daily