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(Bloomberg) – Richard Branson’s Virgin Orbit has agreed to go public through a reverse merger with NextGen Acquisition Corp. II which will value the satellite launch company at $ 3.2 billion.
Investors, including Boeing Co. and AE Industrial Partners, have committed $ 100 million to Virgin Orbit through a private investment in public shares, according to a statement released Monday. The merger is expected to provide the new company with $ 483 million in cash proceeds, bolstering its capital until regular launch operations – and more stable revenue streams – are expected in 2023.
The deal with NextGen extends a wave of mergers with ad hoc acquisition companies. So-called blank check companies like NextGen have raised $ 129 billion globally this year, more than last year’s record $ 84 billion, and the deals are playing a growing role in funding new space companies. A SPAC transaction involving another launch company, Rocket Lab USA, is expected to close this week.
The Virgin Orbit merger is expected to be finalized towards the end of the year. The company will be listed on the Nasdaq Stock Market under the symbol VORB and will retain the name Virgin Orbit.
Boeing rose 2.1% to $ 217.14 at 11:52 a.m. in New York. The stock was little changed this year until August 20, as the Dow Jones Industrial Average rose 15%. NextGen climbed 1.9% to $ 9.86 on Monday.
Companies like Space Exploration Technologies Corp. Elon Musk is reshaping the satellite launch industry by reducing the cost of missions, in part by reusing rockets. This creates opportunities for new businesses in the space. Virgin Orbit, which uses a custom Boeing 747 to launch its reusable rockets at around 35,000 feet above sea level, is part of that effort. The company was founded in 2017.
On June 30, Virgin Orbit delivered satellites to commercial and national security customers. The company has contracts worth $ 300 million, chief executive Dan Hart told CNBC. He predicted he would make 18 launches in 2023, with the figure increasing thereafter.
“We believe in the importance of the satellite launch market and the capabilities Virgin Orbit brings to the industry,” a Boeing spokesperson said via email.
Market potential
PSPC deals have become increasingly difficult to complete as investors have become more selective about private investments in public stocks which are typically part of deals. The poor performance of companies that went public through PSPCs as well as the scrutiny of short sellers, activists and regulators also created obstacles to closing deals.
Another Branson-backed space company, Virgin Galactic Holdings Inc., went public through a PSPC deal in late 2019. The success of this transaction persuaded Branson to also use a reverse merger with Virgin Orbit, he said on CNBC. Raising funds with a PSPC is more efficient and takes less time than a traditional public equity offering, he said.
Virgin Orbit can share its expertise with Virgin Galactic, which plans to offer space travel to the general public – if they are well off – at $ 450,000 a pop. Branson and five Virgin Galactic employees made an approximately one-hour suborbital trip in July.
(Updates with comments from Virgin Orbit CEO in eighth paragraph)
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