Rocket Lab (RKLB.US) CFO: Acquisition of Iridium Communications (IRDM.US) will “double the size overnight” and more deals or follow

The Zhitong Finance App learned that Rocket Lab (RKLB.US) expects its proposed acquisition of Iridium Communications (IRDM.US) to double the size of the company “overnight.” As the space company prepares to use this deal as a springboard to further expand its orbital applications and constellation business, its broader expansion plans are also underway.

Acquisition of Iridium Communications completes Rocket Lab's space map

Rocket Lab is widely known for its launch business. Currently, it has carried out nearly 100 launch missions and is developing larger Neutron rockets. However, the company has also established a space systems business covering satellite components, subsystems, and complete spacecraft.

Rocket Lab announced in June that it will acquire satellite communications service provider Iridium Communications in cash plus shares, with a total transaction value of about 8 billion US dollars. The move marks one of the largest consolidation actions in the commercial space sector in recent years. According to the agreement, Iridium Communications shareholders will receive $27 per share in cash plus Rocket Lab shares, for a total consideration of approximately $54 per share. The deal is expected to close in mid-2027.

The acquisition deeply integrates Rocket Lab's launch vehicle and satellite manufacturing business with Iridium Communications's global L-band satellite network, authorized spectrum resources, and more than 2.5 million subscribers (covering government, defense, aviation, maritime and commercial markets) to form a collaborative ecosystem for aerospace manufacturing and communications services.

Rocket Lab said the move aims to build a “comprehensive space enterprise with vertical integration capabilities that can independently complete the design, manufacture, launch and operation of constellation systems to provide critical communication services to millions of users around the world.” Through this transaction, Rocket Lab will immediately enter a stable satellite communication service revenue trajectory, and can also use self-developed rockets to deploy and replace future constellation systems, thereby reducing dependence on third-party launch service providers. This strategic path coincides with SpaceX (SPCX.US) — the latter also relied on its own rocket power to build Starlink (Starlink) into the world's largest satellite constellation.

Rocket Lab Chief Financial Officer (CFO) Adam Spice said during World Space Business Week that Iridium Communications will fill a missing link in the company's transformation from a launch service provider to a fully integrated space operator. Adam Spice said that what Rocket Lab lacks is the application layer — operating a constellation in orbit and managing the supporting ground infrastructure, and Iridium Communications will fill this gap, extending Rocket Lab's business scope from launch and spacecraft manufacturing to constellation operations and services. “It's going to be an incredible transformation and really complete the entire closed loop for us,” he said. He further stated that Rocket Lab's goal is to become a “next generation end-to-end space company.”

Rocket Lab plans post-merger growth

Adam Spice pointed out that in the past few years, Rocket Lab's annual growth rate was close to 100%, while the growth rate of the more mature Iridium Communications was in the single digits. This means that the acquisition of Iridium Communications will initially drag down Rocket Lab's overall growth rate.

Adam Spice said, “When you double the size of your company overnight — which was the case after the two companies merged — you naturally see some dilution of the growth rate.” However, Rocket Lab believes Iridium Communications has an “interesting growth direction” and is expected to drive the next phase of expansion.

Adam Spice added that greater access to capital and a more “aggressive”, growth-oriented strategy could help unlock these opportunities. He said, “We have developed a number of aggressive plans” aimed at gradually increasing the growth rate of the company after the merger to the level expected by investors.

Rocket Lab targets more space deals

Adam Spice also sees Rocket Lab's market capitalization as an advantage driving further expansion, adding that “capital, like products and management teams, is a weapon.” He said Rocket Lab's “very healthy market capitalization” helped the company advance the acquisition of a company almost the size of its own. In turn, continued execution of the company's strategy should allow Rocket Lab to continue to receive financing for internal investments and future transactions.

Adam Spice notes, “As we continue to execute our strategy, capital markets will continue to fund us, and we will continue to drive business growth through organic and non-organic methods.” He stressed that the deal to acquire Iridium Communications is “the first step in many steps towards a broader space market,” particularly in the fields of applications and constellations.