Firefly Aerospace buys defense contractor SciTec
Firefly Aerospace yesterday announced that it is buying the defense contractor SciTec for $300 million in cash plus $555 million in Firefly shares.
The shares go to SciTec’s owners at an agreed-to value of $50 per share, essentially making those individuals part owners of Firefly.
The acquisition will advance Firefly’s comprehensive space services by adding mission-proven defense software analytics, remote sensing, and multi-phenomenology data expertise. SciTec’s core capabilities – which include missile warning, tracking and defense, intelligence, surveillance and reconnaissance, space domain awareness, and autonomous command and control – will supplement Firefly’s launch, lunar, and in-space services. SciTec further adds ground and onboard data processing as well as AI-enabled systems designed for low latency operations to support advanced threat tracking and response across multiple domains.
In other words, this acquisition is aimed at improving Firefly’s ability to win defense contracts, thus diversifying its business beyond outer space. This suggests its managers believe there isn’t enough business in outer space to put the company in the black. It needs defense contracts, and adding SciTech increases the odds it will win those contracts.
The stock price in this sale, $50, I think tells us something of the motives of SciTec’s owners. At present Firefly’s stock is selling at about $30 on Wall Street, and the price has not changed much today after this announcement. It appears the stock obtained by SciTec’s owners is thus not as valuable as listed in the intended sale price. This in turn suggests that those owners also needed this deal to diversify the company, and were willing to take a loss in the value of their stock to get it.
Then again, my understanding of how Wall Street and stocks function is limited, and my analysis on this point could be completely wrong.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The print edition can be purchased at Amazon or from any other book seller. If you want an autographed copy the price is $60 for the hardback and $45 for the paperback, plus $8 shipping for each. Go here for purchasing details. The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
Firefly Aerospace yesterday announced that it is buying the defense contractor SciTec for $300 million in cash plus $555 million in Firefly shares.
The shares go to SciTec’s owners at an agreed-to value of $50 per share, essentially making those individuals part owners of Firefly.
The acquisition will advance Firefly’s comprehensive space services by adding mission-proven defense software analytics, remote sensing, and multi-phenomenology data expertise. SciTec’s core capabilities – which include missile warning, tracking and defense, intelligence, surveillance and reconnaissance, space domain awareness, and autonomous command and control – will supplement Firefly’s launch, lunar, and in-space services. SciTec further adds ground and onboard data processing as well as AI-enabled systems designed for low latency operations to support advanced threat tracking and response across multiple domains.
In other words, this acquisition is aimed at improving Firefly’s ability to win defense contracts, thus diversifying its business beyond outer space. This suggests its managers believe there isn’t enough business in outer space to put the company in the black. It needs defense contracts, and adding SciTech increases the odds it will win those contracts.
The stock price in this sale, $50, I think tells us something of the motives of SciTec’s owners. At present Firefly’s stock is selling at about $30 on Wall Street, and the price has not changed much today after this announcement. It appears the stock obtained by SciTec’s owners is thus not as valuable as listed in the intended sale price. This in turn suggests that those owners also needed this deal to diversify the company, and were willing to take a loss in the value of their stock to get it.
Then again, my understanding of how Wall Street and stocks function is limited, and my analysis on this point could be completely wrong.
On Christmas Eve 1968 three Americans became the first humans to visit another world. What they did to celebrate was unexpected and profound, and will be remembered throughout all human history. Genesis: the Story of Apollo 8, Robert Zimmerman's classic history of humanity's first journey to another world, tells that story, and it is now available as both an ebook and an audiobook, both with a foreword by Valerie Anders and a new introduction by Robert Zimmerman.
The print edition can be purchased at Amazon or from any other book seller. If you want an autographed copy the price is $60 for the hardback and $45 for the paperback, plus $8 shipping for each. Go here for purchasing details. The ebook is available everywhere for $5.99 (before discount) at amazon, or direct from my ebook publisher, ebookit. If you buy it from ebookit you don't support the big tech companies and the author gets a bigger cut much sooner.
The audiobook is also available at all these vendors, and is also free with a 30-day trial membership to Audible.
"Not simply about one mission, [Genesis] is also the history of America's quest for the moon... Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America's greatest human triumphs."--San Antonio Express-News
The SciTec owners must think the combination of Firefly and SciTek will soon be valued by the market at more than $50/share or they would not have accepted a significantly above-market valuation of the shares. Perhaps they will prove to be correct in this surmise. I suspect SciTec already has something fairly specific in mind that the combined operation can do. Strictly speculation on my part, but I suspect there is a Golden Dome angle here somewhere.
The paperwork, etc. involved in becoming a new defense contractor is incredible. Many within the department are trying to smooth it out but are having a hard time. Just being an established defense contractor is an asset worth at least 50 million. At least, that is what I have gathered over the years through podcasts, etc. I have no actual experience with the process.
Putting the “basis value” at $50 means they can sell in the future for $50 and have $0 capital gains tax.
Fred: Ah, that helps explain this a lot. Thank you.
One of the things I have never understood was companies buying back their stock.
That always struck me as putting money in a pile and burning it.
Everyone knows stocks can take a hit –and stockholders have to be willing to take that hit since all this is just gambling.
How many times have engineers begged for money to actually build things–only for suits to tell them “no,” then take that same amount of money and issue it to some other bloody suit?
Firefly needed to put money into building rockets that don’t blow up.