Rocket Lab NASDAQ:RKLB has agreed to acquire Iridium Communications NASDAQ:IRDM in a cash-and-stock transaction that could give the space company a much bigger role in satellite communications. Iridium shareholders will receive $27 in cash plus Rocket Lab shares based on an exchange ratio, valuing Iridium at about $8 billion in enterprise value. The deal brings together Rocket Lab's launch and satellite manufacturing capabilities with Iridium's low-Earth orbit network, creating a more vertically integrated space business.
The transaction could also give Rocket Lab a stronger position in the fast-developing direct-to-device market, where satellite networks can connect smartphones and other equipment. Iridium's spectrum could be a valuable part of the deal, as only a small number of companies control frequencies that may fit the convergence between mobile satellite services and cellular connectivity. This comes as competition with SpaceX's Starlink continues to intensify, while Amazon has also moved deeper into satellite connectivity through its planned Globalstar acquisition.
Investors responded positively to the announcement, with Iridium shares rising more than 20% and Rocket Lab shares gaining about 10% in New York trading. Rocket Lab said the transaction is expected to close in mid-2027, with a termination fee of about $224 million. For Rocket Lab, this marks its largest acquisition since going public in August 2021 and could possibly help it move closer to becoming a broader space infrastructure company.