In a blockbuster deal today, Rocket Lab acquired the satellite company Iridium and all its satellite constellation assets.

Rocket Lab will acquire all the outstanding shares of Iridium common stock for $54 per share in a cash and stock transaction. This represents an enterprise value for Iridium of approximately $8.0 billion.

The acquisition … merges Rocket Lab’s leading launch capabilities and satellite manufacturing with Iridium’s global satellite communications network, spectrum, and 500-plus strong partner ecosystem to create a competitive, vertically-integrated space company that designs, builds, launches, and operates its own constellations, delivering critical communications capability to millions of users worldwide.

The transaction will give Rocket Lab an immediate foothold in space-based applications, including both proprietary and standards-based satellite Internet of Things (IoT) and direct-to-device (D2D), PNT (GPS-capability), and critical safety-of-life services, creating a formidable challenger in the global telecom market.

This deal continues Rocket Lab’s aggressive effort in the last few years to diversify its capabilities beyond simply launching rockets. It has successfully demonstrated its ability to build satellites and even interplanetary probes. This merger immediately gives the company the spectrum and communications constellation that already has 2.5 million subscribers, with the ability to enhance and expand that constellation using its launch and satellite capabilities. With the introduction of its larger Neutron rocket next year, Rocket Lab will be well positioned to compete directly with all the other communications constellations, and to do it at a lower cost.

The deal also strengthens the company’s vertical integration. As the press release notes, it “creates an end-to-end space company spanning launch, spacecraft, spectrum, and on-orbit communications services through a proprietary network. Expected to eliminate third-party launch costs for constellation deployment and replenishment and captures launch margin internally while guaranteeing orbital access as launch capacity tightens, ensuring continuity of service to customers.”

Not surprisingly, the value of Rocket Lab’s stock today has leaped upward, rising from a closing price on Friday of around $85 to over $100 today (late Monday).

The industry trend across the board now is vertical integration, begun by SpaceX. It just pays to have the rocket company own the satellite constellation. Such a partnership lowers cost, and gives the company great flexibility and control. Expect more satellite constellations to team up with other rocket companies, especially the startups like Stoke Space and Relativity that are building reusable rockets.