Rocket Lab $4.1bn Merger with Vector Capital’s SPAC

By Rahul Mepani, Athean Myat, Suchritha Patlolla, Sung Cho, Kevin Hwang, Josh Figueoroa (Cornell University) and Aman Singla, Kritika and Varshika (NYU).

 

Overview of the deal


Acquirer: Rocket Lab

Target: Vector SPAC (backed by Vector Capital)

Implied Equity Value: $4.1 bn

Closed date: June 30 2021

Proposed ticker symbol: RKLB

Transaction Advisors:

  • Morgan Stanley & Co. will be advising Rocket Lab

  • Deutche Bank Securities will be advising Vector Capital


Rocket Lab, an American-based aerospace manufacturer, announced on March 1, 2021 a merger with Vector Acquisition Corp in efforts to go public through a SPAC. The Vector SPAC raised $300 million in its initial public offering back in September. In joining the latest trend of the past two years, the company will be valued at $4.1 billion including debt and the combined cash the companies will pool in is estimated to be about $750 million. Current RKLB shareholders will hold 82% of the company’s equity upon the merger. Rocket Lab’s entry into the public market is expected to better tackle the fierce competition from Elon Musk’s SpaceX and Richard Branson’s Virgin Orbit LLC as it raises money to continue its satellite expeditions.


"Rocket Lab is a once-in-a-generation company that is democratising access to space through its constant innovation, leading technology and proven execution," - Alex Slusky, Vector CEO

Company Details: (Acquirer - Rocket Lab)


Rocket Lab has launched 97 satellites with affiliations in the public and private sector and is one of the biggest competitors for SpaceX and Virgin Orbit LLC in the Space systems & Applications space. Through merging with Vector, the funding raised will help the startup launch a new vehicle, Neutron, that can serve human missions in space rather than just observational satellite launching. It has been collaborating with NASA extensively for its Gateway project to take humans to the moon and back.

With 16 orbital launches since its founding, Rocket Lab has the second most frequently launched rocket in the US behind SpaceX. Its flagship rocket is Electron, a small rocket that launches satellites and is the only reusable rocket of its size, saving production and launch costs. Additionally, Rocket Lab has an extensive network of production and launch facilities across the US and New Zealand. As a result, Rocket Lab’s products are 90% vertically integrated and are able to produce, reuse, and launch rockets into orbit with little external support.


Founded in: June 2006

Headquarters: Long Beach, CA

Founder & CEO: Peter Beck

Number of employees: 422

Valuation Step-up: 1.16x

Post Valuation: $1.41B (as of Nov 2018)

Total Raised to Date: $727.31M

Past Financing Details: $470.00M (PIPE | March 2021)


Company Details: (Target - Kymab)


Vector Acquisition is a blank check company formed by PE firm Vector Capital targeting the tech industry. It raised $300M by offering 30 million units at $10 in an initial public offering in September 2020. Each unit consisted of one share of common stock and one-third of a warrant, exercisable at $11.50. The SPAC went public to leverage the management team’s expertise in tech to target technology and tech-services sectors.


Founded in: 2020

Headquarters: San Francisco, CA

CEO: Alex Slusky

Number of employees: 40

Market Cap: $0.431B


"This milestone accelerates Rocket Lab's ability to unlock the full potential of space through our launch and spacecraft platforms and catalyses our ambition to create a new multi-billion-dollar business vertical in space applications.” - Peter Beck, CEO of Rocket Lab

Consequences & Upsides