$75 million, this laser equipment manufacturer will be acquired

Rocket Lab USA continues its path of vertical integration and has signed an exclusive but non binding agreement with MynaricAG, a German laser communication terminal (LCT) supplier and Rocket Lab supplier, to acquire the company for $75 million in cash or stock.
If Mynaric achieves its revenue target, it will pay an additional revenue of up to $75 million.

This acquisition depends on whether Mynaric can exit the Chapter 11 restructuring process in Germany, namely StaRUG, on satisfactory terms. Mynaric stated that it has obtained sufficient financing from its lenders to maintain operations during the StaRUG period and complete the process by June. Its main creditors are a group of funds affiliated with Pacific Investment Management Company (PIMCO). Rocket Lab is in exclusive negotiations with PIMCO regarding this acquisition.

On March 11th, Rocket Lab submitted a prospectus that could issue up to $500 million worth of stock to fund the acquisition of Mynaric and other expenses.

Underwriters Bank of America Securities, Cantor Fitzgerald&Co, StifelNicolaus&Company Inc., and TD Securities (USA) LLC will lead the sales efforts and receive a 3% commission from sales revenue, plus up to $100000 in reimbursement expenses.

Laser communication has become a pain point for constellation operators because high-capacity and reasonably priced related products are not easy to obtain, "Rocket Lab USA said in a statement on March 11th. The company stated that it is currently in exclusive negotiations with Mynaric for an acquisition.

Through previous acquisitions, Rocket Lab has demonstrated its ability to transform satellite subsystems and components that were originally only produced on a small scale with long delivery cycles and high costs into affordable and widely available products. Rocket Lab plans to adopt the same strategy for Mynaric's optical terminals.

Undoubtedly, the inability to expand production scale has become the core issue for Mynaric. Its clients include major contractors for the low orbit missile warning and tracking satellite network of the United States Space Development Agency (SDA), such as Northrop Grumman, York Space Systems, and Rocket Lab. These contracts have strict delivery time requirements, and Mynaric has been making every effort to complete them on time. In addition, Mynaric is also the main supplier for the second phase of the Space BACN project of the Defense Advanced Research Projects Agency (DARPA) in the United States.

A key driving factor for this proposed acquisition is that Mynaric is already a subcontractor of Rocket Lab, providing Condor Mk3 optical communication terminals for the company's $515 million main contract with SDA to produce 18 satellites for Tranche 2 Transport Layer Beta Rocket Lab states.

The use of optical communication links for inter satellite communication and air ground connections is a rapidly developing niche field, especially with LCT manufacturers developing micro products capable of adapting to small satellites, competition is becoming increasingly fierce. Companies such as Aerospacelab and SpireGlobal are actively developing their own laser communication products for use in air to ground and inter satellite communication.

For the current generation of products, Mynaric has been competing with Tesat Spacecom, a German subsidiary of Airbus and market leader. In addition to providing terminals for SDA contractors, Tesat has also been selected to provide LCT for Kepler Communications' data relay constellation and Telesat Canada's Lightspeed, for which it is building 792 terminals.

Mynaric released a statement on March 10th updating its StarRUG process. Andreas Reif, Chief Restructuring Officer of Mynaric, stated:
The purpose of the StaRUG program is to create a new starting point for Mynaric without affecting our operational model or manufacturing processes. By reducing debt burden and capitalizing our balance sheet, Mynaric can invest in high-tech development, maintain competitive prices, and ensure our leadership position in the industry.

Rocket Lab stated that its acquisition price of up to $150 million is more advantageous compared to the "over $300 million" invested in Mynaric so far.

This transaction will provide Rocket Lab with European business acquired from Mynaric's Munich production base.

Rocket Lab： We are pursuing every part of the space value chain.

If Rocket Lab's Mynaric can quickly increase its production capacity, the company should be able to win at least some expected orders from the European satellite operator alliance SpaceRise. SpaceRise is managing the Iris2 satellite constellation operating in low Earth orbit (LEO) and medium Earth orbit (MEO) for the European Commission of 27 member states.

In a statement on March 11th, Sir Peter Beck, CEO of Rocket Lab, said, "Over the years, we have been very clear about this strategic direction - Rocket Lab is pursuing every link of the space value chain. We launch our own rockets, mass produce satellites, and now we are approaching the final step, which is also the most valuable part of the space economy - operating our own satellite constellation to provide data and services from space using our newly announced Flatellite spacecraft.

Source: Yangtze River Delta Laser Alliance