Lockheed Martin (LMT) Offers $1.00 Per Share to Acquire Terran Orbital.
Shares of Terran popped in its $1.5 billion trading debut in March of 2022. The stock rose as much as 15% at the open, before falling as much as 19%, and then changing direction again to finish the day up 7.6% at $11.80 a share.
Then it dropped to under $1.00 in less than two years! Oh the humanity.
Lockheed bought another $100 million in October of 2022 at $2.60. The bounce was short-lived.
IPO DAY..
We used to do Risk Arbitrage back in the 80’s, under the tutelage of the famous Joe Sheer, the head of the arbitrage desk at Drexel Burnham. It was the best time of our life. Constant action, and news headlines involving mergers and acquisitions. We loved it.
The way it worked back then is if someone like Jet Blue offers to acquire Spirit Airline for $31 a share, Spirit might jump to $25. Our analyst would then assess the odds of completion (or a competing offer) and if it looked good, we’d buy it and try to capture the $6.00 spread. That was the fun part and we usually used margin and options to hedge the positions.
The hard part, is if we were wrong, the stock would go below the $25 and often even below were it started, before the offer was made. As example, Spirit now sells for $5.60 after the merger their called off.
Just saying…
Terran Orbital is a leading manufacturer of satellite products primarily serving the aerospace and defense industries. Terran Orbital provides end-to-end satellite solutions by combining satellite design, production, launch planning, mission operations, and on-orbit support to meet the needs of the most demanding military, civil, and commercial customers. Lockheed is their largest customer.
Terran Orbital is interesting is that it aside from being another broken SPAC, is that Lockheed Martin already owns 28.3%. In Octon
MORE RECENTLY:
- October 24th, announces Lockheed Martin awards a contract to build 36 satellite buses for Space Development Agency. Total value of the contract to just over $52 million.
- October 27th, announces contract wins valued at over $160 million across three separate programs and spanning two continents over the past week and active engagement on 80 opportunities relating to more than 2,800 satellite buses for 40 different customers, collectively valued at over $2.7 billion, not including additional opportunities valued at $1.6 billion for its new Components & Module segment.
- November 9th, Sophis Investments LLC, Roark’s Drift LLC, and Tyvak Nano-Satellite Systems’ Co-Founders, Jordi Puig-Suari, Roland Coelho and Austin Williams sent a third request to the Company’s Board of Directors to discuss protecting and optimizing long-term shareholder value.
- December 11th, CEO tells employees Monday the company is not looking for a buyer in an effort to quash a report from the WSJ that it was seeking bids by the end of the month.
- In a separate email simply titled “WSJ,” which was sent to all staff, Bell said the WSJ got the story “very wrong” and “we are working with them to correct.” As for desenters, “..shareholder criticism the whole thing is a joke,” he says in the email. “Forget that the board and management has over 30 million shares (they have 16 million) but we have polled investors casually and over 100 million shares say they approve of the direction we are taking and fully support us. The company recently sued one of the Sophis idiots and we will be suing them all in due course. They will eventually go away.”
- December 12th, Sophis announces, “As aligned long-term stockholders, experienced Aerospace & Defense investors, and former Company executives, we care deeply about Terran and its long-term prospects and wish to protect and maximize the material value we believe is embedded within Terran. However, the events over the past 24 hours have made it abundantly clear to us that Marc Bell is not fit to be CEO of Terran.”
- January 2nd, Terren announces, it expects to report an excess of $70 million in cash and cash equivalents as of December 31, 2023. CEO says, “We are entering 2024 with a strong financial foundation that we believe will enable us to continue to execute on our strategic and operational objectives.”
- February 5th, CEO says “We are pleased to have come to an agreement and look forward to furthering our constructive relationship with the Investor Group.” (They gave them a board seat. In connection with the Agreement, the parties have also agreed to customary standstill voting, and other commitments.)
The non-binding proposal consists of a $1/share cash offer for Terran’s (LLAP) outstanding common stock, over $70M in cash for LLAP’s outstanding warrants and assumption of $313M of LLAP’s existing debt.
SHORT TERM CHART
Disclaimer. Risk Arbitrage is extremely risky. Shares could trade back to $0.60 if an agreement isn’t reached. And an hour ago Terran, sounds like they are prepared for a fight.
Consistent with its fiduciary duties and in consultation with its financial and legal advisors, an independent committee of the Board will review and evaluate the Lockheed Proposal as part of the Company’s ongoing review of strategic alternatives to determine the course of action that it believes will maximize value for the Company’s stockholders. However, there is no guarantee that a strategic transaction involving Lockheed Martin or any other party will be approved or consummated. The independent committee does not intend to provide any updates with respect to the Lockheed Proposal or any other transaction, unless and until it deems further disclosure is appropriate.
Terran Orbital Corporation Adopts Limited Duration Stockholder Rights Plan
