Redwire Space goes public through a SPAC after a year of acquisitions

Space infrastructure conglomerate Redwire Space is preparing to go public, announcing Thursday that it is the latest in a string of space companies to merge with an SPAC.

Founded last year by private equity firm AE Industrial Partners, Redwire is merging with specialty acquisition firm Genesis Park, which trades under the ticker GNPK. The deal is expected to close by the end of the second quarter, with the merger resulting in a listing of Redwire on the New York Stock Exchange.

An SPAC is essentially a shell company that raises money through an IPO to acquire another company. Shares of Genesis Park were up more than 5% in premarket trading after the announcement, from the previous close of $ 9.87 per share.

“If you look around the industry now, you see a lot of the older traditional players in space and you have a lot of these new players in space, many of them pre-revenue,” said Peter Cannito, chairman and CEO of Redwire , to CNBC.

“Redwire is a kind of hybrid: we offer that middle ground of enormous kite heritage, but also the disruptive technologies.”

The company focuses on space infrastructure, which it estimates is currently a $ 15 billion market.

Redwire’s collection of businesses includes technologies such as navigation sensors, solar panels, deployable structures, space manufacturing, and robotic arms.

The conglomerate expects to add approximately $ 170 million in cash to its balance sheet through the merger. This includes proceeds from a $ 100 million PIPE round – or private investment in public equity – round, joined by investors Senvest Management and Crescent Park.

The merger values ​​Redwire according to an enterprise valuation of $ 615 million, the companies said. Cannito noted that AE Industrial Partners “will remain significantly invested” after the merger, as the largest single shareholder.

Since AE founded Redwire in June, the company has made a steady series of acquisitions.

Redwire first acquired the satellite components company Adcole Space and space company Deep Space Systems and then Made In Space, a 3D printing specialist.

The conglomerate also acquired satellite technology company Roccor, technical service LoadPath, modular spacecraft builder Oakman Aerospace and satellite mechanics company Deployable Space Systems.

According to Redwire, the combined management teams bring a total of more than 50 years of space travel experience with more than 150 missions.

“We have taken a very differentiated approach to the market here by combining several companies with extraordinary kite heritage,” said Cannito.

These companies are “used to being the primary mission partners of organizations deploying space capabilities,” he added, whether those partners are NASA, the Pentagon or others.

Redwire believes there are more deals to come, Cannito said, noting that going public and “having that public equity as a currency greatly increases our attractiveness as a takeover platform.”

“This allows us to be opportunistic and continue our proven track record of M&A,” said Cannito. “I think we’re looking for bigger goals and this gives us the opportunity, with the flexibility to do it as required.”

Redwire raised $ 119 million in revenue last year, which is expected to grow to $ 163 million by 2021. The company sees that accelerate to more than $ 1.4 billion in revenue by 2025, which Cannito says is based on its products.

“The dollars can turn from government to commercial, and then our profile, in terms of our mix of customers, will turn. So it gives us a lot of stamina. It allows us to be flexible and adapt and change as we move forward. the market is changing, ”said Cannito.

Redwire is cash flow positive and expects its profitability to continue growing to nearly $ 200 million in free cash flow by 2025.

“Our strategy is basically about being that first mission partner,” said Cannito.

Cannito also highlighted the reduction in space access costs, as well as the growing number of rocket builders launching into orbit, as an additional catalyst.

“We are very excited and have a lot of respect for what SpaceX has done with the introduction of an economically reusable launch. the launch costs went down. There are many options now, “said Cannito.

“I believe there is a direct correlation between lowering launch costs and demand for space infrastructure,” he added.

Overall, Cannito pitched its business as a company that is in the midst of the aerospace economy, which has grown to more than $ 420 billion.

“If space wins, Redwire wins,” said Cannito.