Rocket Lab Targets SpaceX's Starlink Dominance in New Deal

**SPEAKER_2** (0:02)
Bloomberg Audio Studios, podcasts, radio, news. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.

**Ed Ludlow** (0:22)
This is Bloomberg Tech. Coming up, Rocket Lab makes its biggest bet yet. Buying Iridium in an $8 billion deal to challenge SpaceX in the orbital economy will speak with CEO Peter Beck. Plus, South Korean firms including Samsung and SK Hynix will spend at least $880 billion on chips and data centers since the country seeks to maintain its edge in the AI era. And Anthropic wins US approval to restore some access to its Mythos 5 AI model after resolving concerns about the technology's potential threats to national security. M&A Monday is blasting off into orbit here on Bloomberg Tech. Rocket Lab making its biggest acquisition ever, agreeing to buy Iridium in an $8 billion deal as it looks to challenge SpaceX in the rapidly growing low earth orbit economy. This is how the shares are reacting. The deal terms $54 a share in a cash and stock transaction for the satellite telephone Pioneer, valuing Iridium at an enterprise value of about $8 billion. The offer $54, that's about a 27% premium to Friday's close. We just showed Iridium shares just a little shy of $54. But why?
Joining us now is Peter Beck, Rocket Lab's founder and CEO. Live from Auckland, New Zealand, let's start there, Peter.
Why buy Iridium and why now?

**Peter Beck** (1:43)
Yeah, it's great to talk to you. But look, I think it's become pretty obvious and we've talked about it for quite some time, that the really large space companies of the future are gonna be a little bit blurry about what a space company even is. And Rocket Lab today, we're the second most frequently launched rocket and we have a large spacecraft business and components business. But really the third leg of the stool was always an application. And by combining Rocket Lab and Iridium together, we really make that complete picture. And what that essentially means is we are a self-launching company.
And I think if you look at other companies that have their own rockets and can build their own satellites, it's a pretty powerful combination.

**Ed Ludlow** (2:24)
I think very early this morning, people got very quickly to this deeper level of vertical integration.
The basics of it, there's also the idea of spectrum, right? Iridium has valuable but a limited source of spectrum. Can you just quantify that for us, how much spectrum you get access to, and kind of like how you leverage that to Rocket Lab's advantage?

**Peter Beck** (2:49)
Yeah, you're exactly right. I mean, you can have all the spacecraft and all the rockets in the hangars you want, but if you don't have the spectrum to actually utilize them, especially for communications, then it's all for nothing. And the very unique thing about Iridium's spectrum is it's L-band spectrum. So L-band is particularly effective in those very difficult and harsh conditions. So not surprisingly, Iridium has built a very, very strong business for servicing safety critical things and the defense network.
And so this obviously enables us to build on this. It's a very established and profitable business to date. But the spectrum is an incredibly valuable asset for sure.

**Ed Ludlow** (3:38)
Peter, going forward, does Rocket Lab just more generally become a buyer of spectrum and an acquirer of assets that give you access to more spectrum?

**Peter Beck** (3:47)
No, no, not at all. I think, I mean, this spectrum gives us a fantastic baseline and head start. If you think about the opposite, we've always said we want to do an application that would take years and years and years to first build the constellations of satellites, deploy them, and then, of course, that's before you even see your first dollar of revenue.
So this really supercharges our interests into applications, and it's a wonderful business to build upon, but our intention here is to leverage the spectrum and what Iridium have built to provide a whole bunch of new services.

**Ed Ludlow** (4:25)
So we have launch, we have satellite manufacturing, and now communications. One of the questions I got from the audience is for you, Peter, is how do you take Iridium's technology and improve it?
They themselves have been very focused on chips, right, and their own custom electronics. What can you do to kind of make best use of it, but also make them better?

**Peter Beck** (4:47)
Yeah, sure. So I mean, I think just the economics alone and the synergies alone when you have control over the most expensive and the most longest lead time items being launch and spacecraft manufacture. I think that just puts, that level of vertical integration just puts everybody into a totally different league. So instead of scratching out business plans on a whiteboard where you have to spend billions of dollars on launch and spacecraft manufacturing, when all of a sudden those costs evaporate, your ability to innovate and execute different business plans becomes vastly superior.