Lockheed Martin Acquires Terran Orbital for $0.25 Per Share: Retail Investors Wonder Why $1 Offer Wasn’t Sealed

Lockheed Martin announced on Thursday it will acquire spacecraft manufacturer Terran Orbital at an enterprise value of $450 million. Following the announcement, shares of Terran plunged over 37% in morning trade.

Lockheed Martin said it will acquire Terran Orbital for $0.25 in cash for each outstanding share of common stock and retire its existing debt. The transaction also provides for Lockheed Martin and other current Terran Orbital creditors while establishing a $30 million working capital facility in place. The deal is expected to close in the fourth quarter of 2024. 

Following the announcement, retail sentiment on Stocktwits flipped into the ‘bearish’ territory (43/100) from the ‘bullish’ zone a day ago. The move was accompanied by high message volume.

Interestingly, Lockheed has been Terran Orbital's largest customer. Terran Orbital was listed in March 2022 through a special purpose acquisition company. Notably, the firm has been a part of Lockheed Martin Ventures portfolio – a fund that makes investments in technology innovations to drive growth in existing, adjacent and new segments for the company – with an initial investment in 2017.

Lockheed pointed out that LM Ventures has since made two additional investments in Terran Orbital in 2020 and 2022. This is the first time that Lockheed Martin is acquiring a portfolio company of LM Ventures, it said.

Terran Orbital reported a net loss of $35.39 million during the quarter-ended June 2024. The firm stated in an exchange filing that as of July 31, 2024, its cash and cash equivalents balance stood at approximately $14.6 million. Without additional funding, the company said the cash will not be sufficient to meet its obligations within the next twelve months.

Notably, Lockheed Martin had offered a much better deal in March 2024. According to an SEC filing, the firm had offered $1.00 in cash for each share of Terran common stock outstanding and over $70 million in aggregate cash for Terran's outstanding warrants. However, later on, the firm withdrew the proposal.

Stocktwits users are expressing diappointment with the overall performance of the firm.

Followers of Terran Orbital are also unhappy with the previous $1 proposal not going through.

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