Raphael Stevens

A sale pending sign is posted in front of home for sale in Greenbrae, California.
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Overview: M&A underway

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.”

What’s 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

Industry maneuvers

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

Market movers

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

Boldly going

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

On the horizon

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. More

More than 50 House Democrats are calling on Walmart, Costco, Kroger, Safeway and Health Mart to make a public commitment to sell the abortion pill mifepristone.
The companies have been silent for months on whether they will get certified to sell the medication.
CVS and Walgreens said in January that they will get certified to sell mifepristone, sparking backlash from Republican attorneys general.
Mifepristone faces an uncertain future as an appeals court weighs a lawsuit that seeks to pull the medication from the U.S. market.

In this photo illustration, packages of Mifepristone tablets are displayed at a family planning clinic on April 13, 2023 in Rockville, Maryland. 
Anna Moneymaker | Getty Images

House Democrats on Thursday called on Walmart, Costco, Kroger, Safeway and Health Mart to publicly commit to sell the prescription abortion pill mifepristone at their retail pharmacies.
Pending lawsuits have jeopardized mifepristone’s approval in the U.S. For now, it is the most common method to terminate a pregnancy in the country.

The five companies have been silent for months on whether they will get certified to sell mifepristone under a Food and Drug Administration program that monitors how the medication is distributed and used by patients.
“It is unconscionable that five of the largest retail pharmacies in the country are refusing to declare whether they will receive certification to provide basic, legal, FDA-approved medication abortion health care for Americans,” Rep. Dan Goldman, D-NY, said in a statement Thursday.
Goldman and Rep. Judy Chu, D-Calif., sent a letter asking the companies’ CEOs to confirm by June 23 whether their pharmacies will get certified to sell the abortion pill.
More than 50 other Democratic lawmakers signed on to the letter.
“Your continued silence is unacceptable as it is misaligned with your publicly stated values in support of equal access to health care and of gender equality,” the lawmakers told the CEOs in the letter.

Democratic governors and senators asked the companies in March whether their pharmacies will get certified to dispense the medication. The companies still have not taken a public position on the issue.
The largest retail pharmacies in the U.S. have found themselves increasingly caught in the middle of the national battle over abortion access, which was set in motion by the Supreme Court’s decision to overturn Roe v. Wade last June. More than a dozen states have banned abortion since the high court overturned the landmark 1973 decision that protected access to the procedure as a right under the U.S. Constitution.

As conservative states implemented abortion bans after the fall of Roe, the FDA sought in January to expand access to mifepristone by allowing retail pharmacies for the first time to dispense the medication if they get certified.
The agency also permanently allowed women to obtain the pill by mail.
CVS and Walgreens, the two largest pharmacy chains in the U.S., said shortly after the FDA decision that they would get certified to sell mifepristone where it is legal to dispense the medication.
The companies soon faced a backlash from Republican state attorneys general, who fear easier access to mifepristone particularly by mail will undermine their states’ restrictive abortion laws or outright bans. 
The GOP attorneys general warned the CEOs of CVS and Walgreens that they would take legal action if the companies sold the pill in their states. Walgreens confirmed to the attorneys general that the company would not sell mifepristone in their states.
Walgreens then got smacked by California Gov. Gavin Newsom. The liberal governor refused to renew a state contract with Walgreens over its move.
Mifepristone’s status as a FDA-approved medication faces a deeply uncertain future, even in states where abortion remains legal.
A group of doctors who oppose abortion sued the FDA last November to pull mifepristone from the U.S. market entirely.
U.S. Judge Matthew Kacsmaryk in the Northern District of Texas ruled in the antiabortion doctors favor in April and suspended the FDA approval. The Supreme Court intervened in the case and preserved access to mifepristone as the litigation plays out.
A panel of three judges at U.S. 5th Circuit Court of Appeals now has the case and could issue a ruling at any time. The appeals court judges appeared skeptical of the Justice Department’s defense of mifepristone during oral arguments in May.
The case will likely end up before the Supreme Court again, particularly if the appeals court rules against mifepristone.

CNBC Health & Science

Read CNBC’s latest health coverage: More

Disney and Pixar’s “Elemental” arrives in theaters Friday.
The company, which operates both Pixar and Disney Animation, has struggled to drum up ticket sales for its animated fare in recent years.
Meanwhile Universal’s Illumination and DreamWorks animation arms have dominated the box office with hits like “The Super Mario Bros. Movie,” “Puss in Boots: The Last Wish” and “Minions: The Rise of Gru.”

Disney and Pixar’s latest animated feature is “Elemental.”

The stakes are high as Pixar releases its 27th feature film in theaters this Friday.
“Elemental,” a romantic immigrant story told through anthropomorphic elements of nature, arrives as Disney is under pressure to prove it hasn’t lost its golden touch in animation.

The company, which operates both Pixar and Disney Animation, has struggled to drum up ticket sales for its animated fare in recent years. Meanwhile, Universal’s Illumination and DreamWorks animation arms have dominated the box office with hits like “The Super Mario Bros. Movie,” “Puss in Boots: The Last Wish” and “Minions: The Rise of Gru.”
Disney’s Pixar studio, in particular, is looking to rebound from the box-office letdown that was “Lightyear.” The Buzz Lightyear origin story snared just $226.7 million at the global box office in 2022, a fraction of what past Pixar films have generated from ticket sales, according to data from Comscore.
“Elemental” is expected to debut between $35 million and $45 million domestically, according to industry analysts, in the midrange for a typical Pixar release but well shy of the $120.5 million that Sony’s animated “Spider-Man: Across the Spider-Verse” picked up during its opening weekend earlier this month.
“Animation certainly seems to be going through some winds of change,” said Shawn Robbins, chief analyst at BoxOffice.com. “Universal and Illumination are leading that charge after a very successful decade that has seen their streak of successes extend into the 2020s, arguably becoming for today’s young Gen Z and older Gen Alpha kids what Pixar and DreamWorks were for Gen X and millennials.”

Robbins said the growing diversity in animation studios and increased competition are positives for the industry overall. However, it has also highlighted a dip in Disney’s box-office prowess.

Falling with style

The pandemic shuttered theaters one week after the release of Pixar’s “Onward,” minimizing the box-office potential of the film. With ongoing restrictions, worries about Covid-19 variants and a trend of parents skipping out on theatrical releases, Disney sent “Soul,” “Luca” and “Turning Red” directly to Disney+.
“Disney’s pandemic strategy of streaming-only distribution, among other creative disruptions, for several of their well-reviewed films did a disservice to the brand, one which new leadership is trying to mend now,” Robbins said.

When “Lightyear” went to theaters, consumers were used to Pixar films going straight to streaming. But that confusion was only part of the reason for the lackluster ticket sales.
“Lightyear” shifted away from a formula that had endeared so many generations to the “Toy Story” franchise — focusing on emotional stories with beloved childhood toys.
The feature was billed as an origin story about the film that made Buzz Lightyear the hottest-selling toy and a coveted prize for young Andy. The characters on screen aren’t toys that believe they are real — rather they are human. This meta-style story might have been enticing to audiences that grew up with “Toy Story” in the ’90s, but for younger generations the science fiction action adventure missed the mark.

Buzz Lightyear and his robot companion Sox embark on an intergalactic adventure in Pixar’s “Lightyear.”

Later that year, Disney Animation’s “Strange World” also failed to lure in moviegoers, tallying just $72.4 million globally during its run, according to Comscore.

Wish upon a star

Disney is hoping “Elemental” will be the start of a new era of animated success for its studios. With more family films in theaters after a drought in the slate, the company will have an easier time marketing its upcoming features to theatrical audiences.
The company is set to release Disney Animation film “Wish” in cinemas over Thanksgiving and has two more Pixar films slated for 2024 — “Elio” and a sequel to “Inside Out.” Disney also plans to eventually release a fifth film in the original “Toy Story” franchise, a third “Frozen” film and a second film based in the world of “Zootopia.”
“Having established itself over the decades as the preeminent producer of animated films, Disney has set the bar for how to perfectly produce, market and distribute animated films,” said Paul Dergarabedian, senior media analyst at Comscore.
Despite recent box-office issues, both Dergarabedian and Robbins foresee a return to form for Disney animation efforts in the future.
“Disney animation boasts unparalleled brand identity, a massive creative talent pool and strong marketing and distribution teams,” Dergarabedian said. “This is a perfect time for Disney to hit the reset on their animated film strategy and reestablish themselves as a revered and legendary creator of animated family films.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. More

Cava is expected to make its market debut on the New York Stock Exchange on Thursday.
If its IPO performs well, other restaurant chains could follow its lead, ending the IPO drought.
Brazilian steakhouse Fogo de Chão and Korean barbecue chain Gen Restaurant Group have both filed regulatory paperwork confidentially.

A person departs a Cava restaurant chain location in Pasadena, California, Feb. 6, 2023.
Mario Tama | Getty Images News | Getty Images

As Cava prepares to make its public market debut Thursday, other restaurant companies will be watching closely while they decide whether to follow in the Mediterranean restaurant chain’s footsteps.
The last 18 months have marked the slowest initial public offering market since the financial crisis. Few U.S. companies have pursued IPOs, wary of a volatile market rocked by the war in Ukraine, inflation, rising interest rates and recession fears.

Of the 44 IPOs that have priced shares this year, just 20 were for companies based in the U.S., according to data from Renaissance Capital, which tracks IPOs and the performance of newly public company stocks.
Cava’s IPO could help break that drought, as a handful of restaurants watch to see how the chain fares as they mull whether to jump into the public market themselves.
“A successful IPO from Cava should open the door to more restaurant IPOs,” said Matt Kennedy, senior strategist at Renaissance Capital. “It’ll show that investors are interested in the space, and companies can get a certain valuation in the public markets.”
On Wednesday evening, Cava priced its IPO at $22 per share, valuing the company at $2.5 billion. The company initially sought to price its common stock offering at $17 to $19 per share, which would have given it a valuation of $2.12 billion, before it raised the range to $19 to $20 per share.
The company will trade on the New York Stock Exchange under the ticker CAVA.

Cava’s decision to raise its initial price range is an early indication the IPO will perform well, Kennedy told CNBC.
That bodes well for the restaurant companies waiting in the wings to go public. Brazilian steakhouse Fogo de Chão and Korean barbecue chain Gen Restaurant Group have both filed regulatory paperwork confidentially, while both Panera Bread and Fat Brands’ Twin Peaks have shared intent to issue an IPO in the near future.
“Nobody wants to be the first one to go public, which is why I think we tend to see companies in the same sector go public in batches,” Kennedy said.
But the window to go public can close much faster than it opens, according to Kennedy. Sudden volatility in the market can spook investors and the private companies hoping to attract them.
Even if the window remains open for future restaurant IPOs, those companies might not see the same level of investor interest as Cava, which reported same-store sales growth of 28% in the first quarter. While the Mediterranean chain is still unprofitable, it’s narrowing its losses and appears closer to reporting more net income than rival Sweetgreen, which went public in November 2021.
“[Cava] rightly came earlier than most because it’s a high-quality name,” said Kevin McCarthy, managing director at Neuberger Berman. More