Rocket Lab to take on SpaceX's Starlink with $8 billion acquisition

By William Gavin

The company says it is buying Iridium Communications as a 'shortcut' to expanding its growing capabilities

Rocket Lab may be known for its launch division, but its other businesses actually generate more revenue.

Rocket Lab said Monday it plans to acquire Iridium Communications, positioning the expanding company as a head-on rival to SpaceX and its Starlink satellite-communications business.

The "historic" acquisition will make Rocket Lab (RKLB) a "fully vertically integrated space powerhouse primed for growth," the company said in a statement. It will give the company a foothold in a variety of space-based applications, including direct-to-device communications, Rocket Lab said.

"This is a defining moment for the space industry and the start of a new era of strategic, accelerated growth," Rocket Lab CEO Peter Beck said in a statement, adding that the companies now have the capability to "unlock entirely new markets."

Rocket Lab plans to acquire Iridium (IRDM) for $54 per share in a cash and stock deal that values the satellite-communications company at $8 billion. Iridium traded at $43.52 per share at Friday's close, for a value of under $5 billion. The acquisition is expected to close in mid-2027.

Rocket Lab said it intends to fund the cash portion of the acquisition, which makes up half of the buyout bid, by drawing from cash on its balancing sheet, as well as other debt and equity financing. It has received commitments for a $3.6 billion, 364-day senior secured bridge term loan facility, the company said.

Iridium shares jumped 25.4% on Monday to just under $54.59. Rocket Lab investors also cheered on the move, sending that company's shares up 15.9% after a poor month for the stock.

The acquisition is the latest announced by Rocket Lab, which has bought three other companies this year. It said its purchase of Iridium is a "shortcut" that will allow it to further develop space applications, its biggest source of revenue.

Analysts expect the launch division to generate $71 million in revenue in the June quarter, compared with $162 million from space systems, according to FactSet estimates.

The deal is "very strategic" for Rocket Lab, William Blair analyst Louie DiPalma said in a note to clients. It gives Rocket Lab access to Iridium's valuable global L-band satellite network, spectrum licenses, government deals and more than 2.5 million subscribers.

Rocket Lab is employing a similar strategy to that of SpaceX (SPCX), which combines a satellite-communications division, rocket-launch business and artificial-intelligence operation under one roof. SpaceX CEO Elon Musk last week was cleared by regulators to acquire a startup founded by former SpaceX employees that develops hardware for fast data-center communications.

Acquiring Iridium could position Rocket Lab to compete with SpaceX's Starlink. However, the company has faced questions over the threat that Starlink poses to its business.

In February, Iridium CEO Matthew Desch said the company has proven it is not a "company in decline" and dismissed concerns that it couldn't compete with Starlink over the long term. A month later, Chief Financial Officer Vincent O'Neill said at a conference that Starlink will "encroach on some limited areas of our business," but only after a few years of expansion.

Desch has also said that Iridium's NTN Direct service is positioning itself as "complementary" to offerings from SpaceX, Amazon (AMZN) and AST SpaceMobile (ASTS). Those companies are developing direct-to-device services connecting smartphones directly to satellites.

DiPalma noted that an Iridium acquisition has been speculated about since Amazon (AMZN) said in April that it would buy satellite company Globalstar (GSAT). At the time, some analysts speculated that AST SpaceMobile might buy ViaSat (VSAT) or Iridium's spectrum assets. SpaceX also has a deal to buy spectrum from EchoStar (ECHO).

Now read: SpaceX's new $11 billion 'saving grace' comes with a big catch

Rocket Lab's market capitalization rose to $53.7 billion at current stock prices, while SpaceX was valued at $2.1 trillion.

-William Gavin

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06-29-26 1730ET