Investing in Space: Bankers and insiders say M&A action is heating up

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The space sector has seen a variety of mergers and acquisitions since the start of the year, but the deal-making is only heating up.

This week I spoke to bankers, private equity partners and investors to get a candid health check on M&A activity in the industry, and the consensus was fairly unanimous. As one financier said: “The dominoes are starting to fall.”

“This is a normal market cycle,” a second financier said, and the pendulum is swinging toward a shakeout: “A lot of those weaker companies fail, and there’s a lot of consolidation.”

“We’re early into the process of reckoning actual demand versus hype,” a third said.

Most people I talked to expect that – absent an unexpected and dramatic swing in macroeconomic conditions – this period of companies selling or failing will last the next 12 months. CNBC agreed to keep their identities anonymous so they could talk freely about non-public discussions and sentiments. 

“A lot of these sort of startup companies that have been around for the last few years will see the wall in front of them and likely sell ahead of that,” another financier said.

On the top end of the M&A market, multiple bankers told me that United Launch Alliance — the joint venture between Lockheed Martin and Boeing — continues to be shopped around, as has been reported, while packaging giant Ball is looking to sell off its aerospace subsidiary. ULA referred my request for comment on the sale process to Boeing and Lockheed. A Ball Aerospace spokesperson declined to comment.

Meanwhile, one financier told me even Boeing is exploring options for its space business, and “everything’s on the table.” The person, who had knowledge of the conversations, told me no “hard decisions” have been made yet regarding what the company may do with its space portfolio, but it could potentially divest or sell its satellite manufacturing unit. Boeing did not respond to my request for comment.

An important nuance emphasized by many during my conversations: these deals, whether they’re worth millions or billions, are not all equal. The markets and underlying technologies of space companies are often very different, and the reasons why one company sells or fails are often just as different from that of another. 

Likewise for buyers, who may go after a deal because they’re chasing a deep discount, looking to quickly add talent in a key area, adding complementary services or technology, or any other number of incentives.

“This is an incredible opportunity … if you’ve been doing all the hard work through the market frenzy and you’ve been building a business on sound unit economics … now is the time to move,” one person told me. “You can really clean up.”

• Ursa Major and Orbit Fab conduct layoffs, as the pair of Colorado companies adapt to the new normal of a tight funding environment. Ursa Major was hit particularly hard, letting go of about 27% of its employees. – CNBC
• Space Force assigns 12 missions to SpaceX and ULA: Under the previously awarded NSSL Phase 2 contract, the companies each were given six assignments. The average price of SpaceX’s missions is $90.2 million per launch, while ULA’s average out to $105.5 million per launch. – Read more
• ULA’s debut Vulcan launch likely to slip to Q4: The company is making modifications to the upper stage of the rocket after an explosion during testing in March. – Ars Technica
• SpaceX launches 40th and 41st missions of the year, including the Transporter-8 rideshare mission that carried 72 satellites for multiple companies. The mission also marked the company’s 200th successful landing of an orbital rocket booster. – Read more
• Stoke Space tests rocket direction control, as the company continues to pursue a way to develop a fully reusable rocket. – Stoke

• SAIC awarded $64 million contract by Pentagon’s Space Development Agency, to develop and maintain a virtual “factory” in orbit for software applications of the SDA’s low Earth orbit constellation. – SpaceNews
• BlackSky wins ‘more than’ $30 million contract, to provide satellite imagery services to an unnamed international military customer for multiple years. – BlackSky
• NASA awards SpaceX with cube satellite launch contract, for the company to launch four of the agency’s cubesats no earlier than 2025 on a Falcon 9 rocket. – NASA
• Tomorrow.io raises $87 million to build out its weather and climate satellite constellation, in a round led by Activate Capital and joined by  RTX Ventures, Seraphim Space, Chemonics, SquarePeg Capital, Canaan, ClearVision, JetBlue Ventures and Pitango. – SpaceNews

• Planet lowers annual revenue guidance. It also increased its expected annual loss forecast, as the company reported fiscal first-quarter results. Planet CFO and COO Ashley Johnson emphasized the “challenging macro environment” and said the company remains “focused on the path to profitability.” – CNBC
• Astra shareholders approve plan for reverse stock split, giving the company the option to perform a split in the range of 1-for-5 to 1-for-15. – Astra

• David Anderman joins Surf Air, with the former top SpaceX lawyer seeking to help take the aviation company public as its Chief Legal Officer. – CNBC
• Steve Collar stepping down as CEO of SES, after more than 20 years at the Luxembourg-based satellite communications company. At the end of June, SES CTO Ruy Pinto will assume the role of CEO, with the company searching for a permanent successor. – SES
• Rick Baldridge retiring from role as Viasat Vice Chairman, after leading the Inmarsat acquisition process. Baldridge joined Viasat in 1999, serving in roles including COO and CEO. – Viasat
• Tony Gingiss joins Terran Orbital as COO, having previously served as the COO of Virgin Orbit, with prior leadership roles at Airbus OneWeb Satellites as well as Boeing’s satellite unit. – Terran Orbital
• Ron Garan named CEO of ispace’s U.S. business: Garan, who flew as NASA astronaut on Space Shuttle and previously was an Air Force fighter pilot, will lead the Japanese company’s office in Denver. – ispace
• Curt Blake joins law firm Wilson Sonsini, to lead a new space-focused industry group. Blake was the cofounder and CEO of Spaceflight, which was acquired recently by Firefly Aerospace. – Wilson Sonsini
• Kerry Wisnosky hired as CEO of Quantum Space, joining the spacecraft transportation and services startup, with his prior company Millennium Engineering and Integration having merged with QuantiTech in 2021.  – Quantum Space

• June 18: SpaceX’s Falcon 9 launches Satria communications satellite from Florida.
• June 19-25: Paris Air Show
• June 21: ULA’s Delta IV Heavy launches NROL-68 satellite from Florida.