*Update - Shares of LLAP to be delisted after the close of extended hours trading on Tuesday, October 29th 2024. Lockheed Martin to acquire shares for $0.25/cash per share.
Terran Orbital Corporation Set for Merger with Lockheed Martin
On August 15, 2024, Terran Orbital Corporation, a satellite manufacturing and defense technology company, signed a merger agreement with Lockheed Martin, a prominent defense contractor. This merger, if approved, will mark Terran Orbital’s transition to a wholly-owned subsidiary of Lockheed Martin, introducing a fresh chapter in its operations and industry footprint.
Key Points of the Merger Transaction
Transaction Structure
The agreement outlines that a subsidiary of Lockheed Martin, Tholian Merger Sub, Inc., will merge into Terran Orbital, with Terran Orbital as the surviving entity under Lockheed Martin’s ownership. For shareholders, each share of Terran Orbital common stock will be converted into the right to receive $0.25 in cash per share, pending approval of the transaction.
The Shareholder Meeting and Voting Process
The transaction hinges on a shareholder vote at an upcoming special meeting. Here’s what you need to know:
Meeting Details: The meeting will be conducted online, allowing shareholders to participate virtually, regardless of location or shareholding size.
Voting Items: Shareholders will vote on three main proposals:
Merger Agreement Approval: To approve the adoption of the merger agreement.
Executive Compensation: A nonbinding advisory vote on compensation for executive officers related to the merger.
Adjournment of the Meeting: A proposal to adjourn if there are not enough votes for approval.
The board of directors at Terran Orbital has unanimously recommended that shareholders vote in favor of all three proposals, expressing that the merger aligns with the company’s long-term strategy.
Required Approval for Merger Completion
For the merger to proceed, a majority of outstanding shares must vote in favor of the merger proposal. If a quorum is not met or if there is insufficient support for the merger, the board may adjourn the meeting to gather more votes, though this would delay the timeline.
Financial Considerations and Valuation
Under the agreement, shareholders are set to receive $0.25 per share in cash, a consideration based on the company’s recent valuation and market position. While the merger reflects Lockheed Martin’s long-term interest in expanding its satellite capabilities, the payout could impact current shareholders’ expectations.
Terran Orbital's board has engaged Lincoln International LLC to provide a fairness opinion to assess if the terms reflect fair value to stockholders. This external review is a critical component, adding an extra layer of due diligence to reassure shareholders of the transaction's alignment with financial best practices.
Appraisal Rights for Shareholders
Delaware law provides stockholders with “appraisal rights,” meaning they can request a court-determined fair value for their shares if they do not support the merger and follow the legal steps outlined in Section 262 of the Delaware General Corporation Law (DGCL). This could allow dissenting shareholders to receive more or less than the $0.25 per share offered, depending on the court's assessment.
Potential Benefits and Strategic Value of the Merger
Synergies Between Terran Orbital and Lockheed Martin
The merger holds strategic benefits for both companies, notably in technology development and enhanced satellite production capabilities. Lockheed Martin stands to deepen its presence in the satellite market and expand its technology resources with Terran Orbital’s specialized manufacturing capabilities.
Impact on Employees and Company Structure
Following the merger, Terran Orbital will continue as a subsidiary of Lockheed Martin. The current directors and executives are expected to remain at the company post-merger, facilitating a smoother transition. This continuity aims to preserve Terran Orbital’s internal culture and ensure minimal disruption for employees during integration.
Future Prospects for Investors
With Lockheed Martin’s resources and established defense industry footprint, Terran Orbital is likely to have greater capacity for innovation and growth. For long-term investors, the potential expansion in satellite and defense technology may offer substantial benefits. However, the near-term payout per share may not meet the immediate expectations of shareholders hoping for higher market returns.
Final Thoughts for Shareholders
The merger between Terran Orbital and Lockheed Martin could reshape Terran Orbital’s future and expand its role within the aerospace and defense industry. Shareholders should consider the strategic value of the merger, along with the immediate financial impact, before casting their votes. For those seeking additional information or assistance with voting, the company’s proxy solicitor is available to help navigate the process.
FAQs
Why is Terran Orbital merging with Lockheed Martin?
The merger allows Terran Orbital to leverage Lockheed Martin’s resources, facilitating growth in satellite technology and defense applications.
What will I receive per share if the merger is approved?
Shareholders will receive $0.25 per share in cash if the merger is approved.
What are appraisal rights, and how can I exercise them?
Appraisal rights allow shareholders to petition for a court-determined “fair value” of their shares if they disagree with the merger terms. Detailed instructions for this process are available under Section 262 of the DGCL.
LLAP Merger
LLAP Merger
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