Terran Orbital Corp. Buyout Proposal

Shares of Terran Orbital Corp. surged to a two-month high following the announcement of an unsolicited all-cash buyout proposal from Lockheed Martin Corp.

Response to Buyout Attempt

In light of this proposal, Terran implemented a limited-duration stockholder rights plan, commonly known as a "poison pill," to prevent what they believe to be an undervalued acquisition.

Market Response

The stock rallied by 9.4% in morning trading, setting it up for the highest close since January 3rd. Trading volume witnessed a significant surge to 5.9 million shares, well above the 30-day average of approximately 2.3 million shares.

Lockheed's Move

Lockheed, on March 1st, made a "non-binding proposal" to purchase all outstanding shares of Terran for $1 per share in cash, indicating a 6.5% discount from the previous day's closing price of $1.07. Notably, Lockheed already holds 28.3% of Terran's shares, making it the largest shareholder.

Terran's Rights Plan Implementation

Terran announced the introduction of a rights plan, effective immediately, triggered if an investor acquires 15% or more of the company's stock without board approval. In such an event, the holder of each right is entitled to purchase common stock at double the exercise price.

Safeguarding Stockholder Interests

The company emphasized that the rights plan acts as a deterrent against any person or group attempting to gain control through non-approved means. This move aims to protect the interests of all stockholders by ensuring fair control premiums and allowing the board adequate time for informed decisions in the best interest of all.

Recent Strategic Decisions

A month prior to this announcement, Terran had collaborated with an investor group, including Sophis Investments LLC, agreeing to appoint an independent director. Committed to exploring various value-creating initiatives, Terran also provided updates on their successful partnership with Lockheed in October 2023, highlighting ongoing projects such as building 42 satellite buses.

Terran's Stock Performance

Terran's stock has experienced a 2.6% gain year-to-date, but has seen a significant decline of 51.9% over the past 12 months. In contrast, the Ark Space Exploration & Innovation ETF ARKX has shown a modest increase of 1.7% over the past year, while the S&P 500 index SPX has surged by 26.9%.