By Dean Seal

Lockheed Martin has submitted a nonbinding offer to buy satellite maker Terran Orbital's 223 million outstanding shares for $1 each and pay $70 million for its outstanding warrants.

The defense contractor, which has a 28.3% stake in Terran and uses the firm to build satellites for its Pentagon contracts, said in a letter Friday that Terran represents an attractive opportunity and that it considers the potential acquisition to be a strategic priority.

"We are committed to an acquisition of Terran and stand ready to work with you to negotiate a mutually acceptable transaction on an expedited timeline," Lockheed said in the letter.

Lockheed said it is willing to pay $1 in cash for each share outstanding, based on about 223 million common shares and dilutive stock-based compensation outstanding as of last month.

The company is also offering to pay out more than $70 million to Terran's warrant holders, saying the warrants represent a "significant liability" as they constitute about 31% of Terran's current market capitalization.

On top of that, Lockheed said it would assume or repay Terran's existing debt liabilities, which amounted to $313 million as of Sept. 30.

Lockheed invested in Terran in 2017 and serves as its largest revenue-generating customer, accounting for 81% of its backlog as of the end of 2022, the company said.

The Wall Street Journal reported in December that Terran was seeking a buyer and had attracted interest from potential suitors in the U.S. and Europe. The company's stock slipped below $1 last fall, putting it at risk of delisting and has struggled to stay afloat since.

Write to Dean Seal at

(END) Dow Jones Newswires

03-01-24 1900ET