Redwire Space goes public through a SPAC after a year of acquisitions

Space infrastructure conglomerate Redwire Space is preparing to go public and announced Thursday that it is the latest in a series of space companies to merge with a SPAC.

Redwire, formed last year by private equity firm AE Industrial Partners, is merging with special-purpose acquisition company Genesis Park, which is traded under the ticker GNPK. The deal is expected to close late in the second quarter, and the merger will result in Redwire being listed on the New York Stock Exchange.

A SPAC is essentially a shell company that raises money through an initial public offering to acquire another company. Genesis Park shares were up more than 5% in premarket trading after the announcement, from their previous close of $ 9.87 per share.

“When you look around the industry now, you have a lot of the older traditional space players and a lot of these new space entrants, a lot of them predate the revenue,” Redwire President and CEO Peter told CNBC. Cannito.

“Redwire is kind of a hybrid – we’re offering that middle ground of tremendous flight heritage, but also disruptive technologies.”

The company focuses on space infrastructure, which it estimates is currently a $ 15 billion market.

Redwire’s collection of companies includes technologies such as navigation sensors, solar panels, deployable frame, fabrication in space, and robotic arms.

The conglomerate expects to add about $ 170 million in cash to its balance sheet from the merger. This would include proceeds from a $ 100 million PIPE round, or private investment in public stock, to be added by investors Senvest Management and Crescent Park.

The merger values ​​Redwire at a business valuation of $ 615 million, according to the companies. Cannito noted that AE Industrial Partners “will maintain a significant investment” after the merger, as its largest individual shareholder.

Since AE formed Redwire last June, the company has been on a steady wave of acquisitions.

Redwire first acquired the satellite components business Adcole Space and aerospace firm Deep Space Systems and then acquired Made In Space, a 3D printing specialist.

The conglomerate also acquired satellite technologies firm Roccor, engineering service LoadPath, modular spacecraft builder Oakman Aerospace and satellite devices company Deployable Space Systems.

In total, according to Redwire, the combined management teams bring more than 50 years of space experience, with more than 150 missions.

“We have taken a very differentiated approach to the market here by combining different companies with an extraordinary flight heritage,” said Cannito.

These companies are “used to being the primary mission partner for organizations that are deploying space capabilities,” he added, whether those partners are NASA, the Pentagon or others.

Redwire believes more deals are coming, Cannito said, noting that going public and “having that public capital as a currency significantly increases our appeal as an acquisition platform.”

“This allows us to be opportunistic, to continue our already proven track record of mergers and acquisitions,” Cannito said. “I think we will look to do some bigger goals and this gives us the opportunity, with the flexibility to do it as needed.”

Redwire generated $ 119 million in revenue last year, which it expects to grow to $ 163 million in 2021. The company expects it to accelerate to more than $ 1.4 billion in revenue by 2025, which Cannito said is based on its products.

“Dollars can pivot from government to commercial, and then our profile, in terms of our customer mix, will pivot along with it. So it gives us a lot of staying power. It allows us to be flexible and adjust and transform as the environment changes. market, “Cannito said.

Redwire has positive cash flow and expects its profitability to continue and grow to nearly $ 200 million in free cash flow by 2025.

“Our strategy is really about being the primary mission partner,” Cannito said.

Cannito also emphasized the reduction in the cost of access to space, as well as the increasing number of rocket builders launching into orbit, as an additional catalyst.

“We are very excited and have a lot of respect for what SpaceX has done with the introduction of the inexpensive and reusable launch. We are also excited about all the other launch providers that have entered that space and have done so now, and as a result of the increase. from the competition, which reduced the launch cost. Now there are many options, “said Cannito.

“I think there is a direct correlation between reductions in launch costs and the demand for space infrastructure,” he added.

Overall, Cannito presented his company as a company in the middle of the space economy, which has grown to more than $ 420 billion.

“When space wins, Redwire wins,” Cannito said.