Rocket Lab will acquire satellite communications company Iridium in a deal valued at about US$8 billion (NZ$14.2b), with the aim of transforming the company, while taking on SpaceX and its Starlink service.
Under the agreement announced on Monday, Rocket Lab would pay US$54 a share for Iridium through a mix of cash and Rocket Lab shares, valuing Iridium at an enterprise value of about US$8 billion.
The transaction is expected to close in mid-2027, subject to shareholder and regulatory approvals.
The acquisition would give Rocket Lab ownership of Iridium's global low-Earth-orbit satellite communications network, its global L-band spectrum rights and more than 2.5 million subscribers worldwide.
Iridium was founded by Motorola in the early 1990s, and provided voice, data, positioning and navigation services to customers in defence, aviation, maritime and commercial markets.
Rocket Lab founder and chief executive Sir Peter Beck described the takeover as one of the most transformative deals undertaken in the space industry.
"This is a defining moment for the space industry and the start of a new era of strategic, accelerated growth for Rocket Lab and Iridium," Sir Peter said.
"Iridium has built the gold standard in secure, safety critical global satellite connectivity."
The deal marked a significant shift in Rocket Lab's business model.
The transaction moved Rocket Lab beyond its traditional role as a launch provider and manufacturer towards becoming a satellite communications and services company.
From its origins as a launch company, Rocket Lab has spent the past decade expanding into satellite manufacturing and space systems.
Acquiring Iridium would provide it with a large recurring revenue stream from satellite communication services rather than relying primarily on launch and hardware contracts.
Rocket Lab told investors the acquisition would accelerate its move into higher-value space applications markets, including direct-to-device communications, internet-of-things services, positioning and navigation systems, and defence applications.
The acquisition would make Rocket Lab one of the few companies able to design satellites, manufacture spacecraft, launch them into orbit and operate a communications network from space.
Rocket Lab has secured commitments for a US$3.6b (NZ$6.4b) bridge financing facility from Deutsche Bank and Wells Fargo and said it intended to fund the cash component of the transaction through a combination of existing cash, debt and equity financing.
Investors welcomed the deal, with Rocket Lab's Nasdaq-listed shares climbing by nearly 16 percent to close at US$97.95 (NZ$173).
This story was first published on rnz.co.nz