It’s anticipated that the deal will be completed during Q2 2021, valuing the newly-formed firm at around $615 million, while arming it with $170 million in liquid capital. Following Redwire’s acquisitions of Adcole Space, Deep Space Systems (DSS) and Made In Space (MIS) last year, the merger could provide it with the backing needed to continue expanding on its already substantial aerospace portfolio.
In the aftermath of Redwire’s announcement, shares in the SPAC rose by more than 5% from $10.18 to $10.75, but they’ve since settled at around the $10.35 mark.
“We are thrilled to enter into this business combination with Genesis Park,” said Peter Cannito, Chairman and CEO of Redwire. “With their extensive aerospace, operational and financial expertise, and strong industry relationships, we are confident that Genesis Park is the right partner to propel Redwire’s growth in the public market.”
Redwire’s rapid growth trajectory
Since it was founded by private equity firm AE Industrial Partners (AEI) in June last year, Redwire has been on something of an aerospace acquisition spree. The firm initially acquired Adcole Space, DSS and MIS in quick succession, before purchasing payload developer LoadPath in December 2020, and merging them into what it called a “next generation space technology platform.”
Pooling these resources has provided Redwire with substantial in-orbit servicing, assembly and manufacturing capabilities, and allowed it to tap into a space economy that it claims could be worth $2 trillion by 2040. Already, the firm has deployed MIS’ technologies to make R&D advances by 3D printing novel turbine blisks in-orbit, and generated significant revenue thanks to the established client bases of its umbrella firms.
In fact, ahead of its upcoming merger with Genesis Park, Redwire is projecting total revenue of $163 million for 2021, with an annual compound growth rate of 72% that would see it hit $1.4 billion by 2025. Given that the company has already conducted several mergers, it now sees itself as a “prime candidate for margin improvement” as it continues to scale its business.
“Redwire has established itself as a first-mover consolidator and an acquirer of choice, and we believe its position will be further improved as a public company,” said Paul Hobby, CEO and Director of Genesis Park. “We are very excited about Redwire’s growth potential, and we look forward to partnering with Peter and his team, as they help usher in this new era of space exploration.”
Terms of a $615 million merger
Under the terms of the merger, Redwire and Genesis Park are expected to combine by the end of Q2 2021, into a company that retains the ‘Redwire’ moniker while becoming listed on the NYSE. Cannito is also set to remain CEO of the new company, but the board will be revamped to include members from serial backers AEI, as well as Genesis Park.
Based on a calculation that estimates its EBITDA by 2023 at $64 million, and multiplies this by 9.6, the revised Redwire has been given an initial valuation of $615 million. Assuming there are no redemptions by Genesis Park shareholders, the transaction is therefore expected to generate $170 million in funds, to help fuel the new firm’s future growth.
Part of the merger is also being backed by a Private Investment in Public Equity (PIPE), that will see Senvest Management and Crescent Park Management buy stock at $10.00 per share (or below the market rate). In doing so, the investors effectively aim to reinforce the deal against any market volatility, as well as supply $100 million of the funding total.
Overall, the transaction, which remains subject to approval by Genesis Park shareholders, will see Redwire stakeholders retain 55% control of the merged company. According to Kirk Konert, a Partner at AEI, the deal essentially provides Redwire with a means of seeking out fresh growth opportunities, and building on its suite of aerospace services.
“As an innovative space infrastructure leader, Redwire is set to power a new age of space travel, exploration and commerce,” said Konert. “With this transaction, Redwire will have even greater opportunities to drive growth and value by delivering tailored, responsive solutions for its growing customer base across the public and private sectors.”
Some of 3D printing’s biggest firms have opted to go public via SPAC mergers rather than IPOs over the last six months, and generated substantial funding in the process. Desktop Metal seemingly set this trend in December 2020, when it went public on the NYSE via a reverse merger with Trine Acquisition, forming a combined $2.5 billion company and raising $575 million in funding.
Similarly, Markforged agreed to merge with blank check firm ‘one’ during February 2021, in an agreement that values the combined company at around $2.1 billion. The deal will see Markforged become listed on NYSE later this summer, and raise $425 million towards the expansion of its portfolio of products and materials.
3D printer manufacturer VELO3D, meanwhile, has confirmed rumors that it too will be going public via a SPAC merger, as part of a deal with JAWS Spitfire Acquisition. The transaction, which is likely to go through during H2 2021, will value the combined entity at $1.6 billion while raising $500 million to fund VELO3D’s continued growth.
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Featured image shows a satellite in low earth orbit. Image via Made In Space.