Rocket Lab buys Iridium in $8 billion deal to take on SpaceX
FILE PHOTO: A Rocket Lab technician cleans a fuselage in Auckland, New Zealand, October 20, 2015. Picture taken October 20, 2015. REUTERS/Nigel Marple/ File Photo
June 29 : Rocket Lab struck an $8 billion deal to acquire satellite communications provider Iridium Communications on Monday, betting on a SpaceX-style advantage that combines a constellation of satellites with the in-house rockets that will launch them.
The transaction adds to growing momentum in the space sector, where investor appetite has surged since SpaceX raised about $86 billion in the world's largest IPO earlier this month.
The deal accelerates Rocket Lab's long-time push beyond launch services by adding an established satellite network, its globally coordinated spectrum and millions of largely enterprise and government customers — assets that could have taken Rocket Lab several years and billions of dollars to build itself.
"We have a very profitable business being Iridium to start with, essentially a brand new constellation... And of course, the all-important spectrum," founder and CEO Peter Beck told Reuters.
Rocket Lab said the deal will allow the company to expand Iridium's Direct-to-Device business and launch into "untapped markets and pioneer new space-based services." Key to the company's strategy of launching its own satellite constellations is Neutron, its reusable medium-lift rocket targeted to make its first flight in the fourth quarter of 2026.
Iridium shareholders will receive $27 in cash plus Rocket Lab shares, with a combined value of $54 per Iridium share — a 24.1 per cent premium to the stock's last close. The deal is expected to close in mid-2027.
Rocket Lab shares jumped 10 per cent while Iridium shares, which have more than doubled in value already this year, soared about 22 per cent.
"By acquiring Iridium, Rocket Lab immediately secures an initial customer base and distribution network, which may prove even more valuable than the hardware, spectrum rights and other assets it gains as part of the deal," said Micah Walter Range, president of space consulting firm Caelus Partners.
Founded by Motorola in the late 1980s, Iridium pioneered one of the world's first global low-Earth orbit satellite communications networks. It survived a high-profile bankruptcy in 1999 and reinvented itself as a profitable provider of communications services to government, aviation, maritime and industrial customers.
The acquisition combines Rocket Lab's launch vehicles and satellite-manufacturing business with Iridium's global L-band satellite network, licensed spectrum and more than 2.5 million subscribers spanning government, defense, aviation, maritime and commercial markets.
The strategy is similar to that of SpaceX and its Starlink unit, combining launch capabilities with satellite communications services. The Elon Musk-led company plans to expand its communications satellite business while developing orbital AI computing infrastructure.
Rocket Lab has secured commitments for a $3.6 billion bridge loan from Deutsche Bank and Wells Fargo to fund the cash portion of the acquisition. The company said it also plans to use cash on hand alongside additional debt and equity financing.
