Rocket Lab approaches agreement to merge with Vector SPAC


Rocket Lab is considered a pioneer among a new generation of so-called small launch providers.


Photo:

Rocket Lab / Associated Press

Space transportation startup Rocket Lab USA Inc. is on the verge of reaching a deal to go public by merging with a special-purpose acquisition company, as a wave of such deals proceeds.

Rocket Lab is in talks with Vector Acquisition Corp.

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on a deal that would value the US-New Zealand startup at around $ 4.1 billion, including debt, according to people familiar with the matter. The transaction could end on Monday, assuming the talks don’t fall apart.

Vector Acquisition, backed by technology-focused private equity firm Vector Capital,

raised $ 300 million in a September initial public offering. It’s one of hundreds of SPACs, going public without a business and then looking for one or more to combine to raise money in recent months as a wave of blank checks washed over Wall Street and Silicon Valley alike.

Rocket Lab, whose sponsors have included defense giant Lockheed Martin Corp., is seen as one of the pioneers among a new generation of so-called small launch providers. The startup has already launched 97 satellites for the government and for private companies for applications including research and communications. While a handful of established companies, including Elon Musk’s SpaceX, are focused on sending huge satellites into higher orbits, there are more than 100 small rocket startups around the world aiming to serve lighter satellites. In addition to Rocket Lab, British businessman Richard Branson’s Virgin Orbit LLC is an increasingly important player in the field.

Another of Mr. Branson’s entities, the Virgin Galactic space tourism company,

went public through a merger of SPAC in 2019, putting it at the forefront of the frenzy of blank check deals.

Rocket Lab’s deal with Vector is expected to include additional funding of around $ 470 million in the form of so-called private investment in public equity from investors like BlackRock. Inc.

and Neuberger Berman Group LLC, people familiar with the matter said. These investments usually accompany SPAC agreements.

Rocket Lab is expected to use proceeds from the deal to fund the development of a mid-elevation “Neutron” launch vehicle designed for use in mega-satellite constellations, space missions and commercial space flights, the people said. The Neutron rocket is expected to be able to lift most of the satellites that are forecast to launch in the coming years and will position itself as a lower-cost alternative to larger vehicles, they said.

Rocket Lab also has negotiating ambitions. In fact, industry officials anticipate that a shakeup may eventually leave only a handful of survivors among small-launch vendors.

Write to Cara Lombardo at [email protected]

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It appeared in the March 1, 2021 print edition as ‘Space Transportation Startup Closes in on Deal to Go Public Rocket Lab Closes in on Deal to Merge with Blank-Check’.

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