Lockheed Martin Corp. (NYSE: LMT) submitted a proposal to acquire Terran Orbital, a satellite manufacturer headquartered in Boca Raton, Florida.
The defense giant's nonbinding proposal values Terran Orbital (NYSE: LLAP) at about $600 million, according to a Securities and Exchange Commission filing. Lockheed is offering $1 in cash for each share of Terran Orbital common stock and to pay its existing debt of $313 million.
Lockheed Martin has a long history with the satellite maker. It invested $36 million in Terran Orbital in 2017 and another $100 million in 2022.
In the securities filing, Lockheed Martin said it is Terran Orbital's largest revenue generating customer, accounting for 81% of the company's backlog as of December 2022.
"In addition to being the largest historical revenue generating customer we are confident that we will continue to be the largest revenue generating customer for Terran for the foreseeable future," states the proposal, dated March 1. "As a result, we are uniquely qualified to assess the company’s near and long-term outlook and accurately ascribe fair value to Terran’s business for all its stakeholders."
Acquiring Terran Orbital will help Lockheed Martin accelerate its space sector strategic priorities, the proposal added.
Founded in 2013, Terran Orbital manufactures satellite products for the aerospace and defense industries. It went public in 2021 after merging with special purpose acquisition company Tailwind Two Acquisition Corp. in a $1.6 billion deal. However, its stock price has plummetted since it began trading on the New York Stock Exchange.
Last year, a shareholder group called for the replacement of chairman and CEO Marc Bell, claiming a series of management errors caused Terran Orbital's stock to crater after going public. Last month Terran Orbital reached an agreement with the shareholder group, Bell said in a statement.
Terran Orbital did not immediately respond to a request for comment. According to a news release, the company's board will review the Lockheed proposal.
The firm adopted a limited duration stockholders rights plan on March 1 in response to the Lockheed Martin proposal. The plan will reduce the chances that a person or group can gain control of Terran Orbital through "coercive tactics" that would not benefit shareholders, the news release said.
The plan "is intended to encourage anyone seeking to acquire the Company, including Lockheed Martin, to negotiate with the board prior to attempting to impose a transaction," the statement said.