Rocket Lab Sold $1.9 Billion of New Stock to Pay for Iridium. Here's the Dilution Math.
The space company sold about 5% of itself so it wouldn't have to borrow $3.6 billion. And the share count still isn't done growing.
Overview
Rocket Lab (NASDAQ:RKLB) said on Sept. 15 that its pending acquisition of satellite operator Iridium Communications (NASDAQ:IRDM) is fully funded. The space company completed a $1.94 billion at-the-market stock sale (about 29.3 million new shares). And it terminated the $3.6 billion bridge loan it had lined up in late June to backstop the deal.
In other words, Rocket Lab decided to pay for the cash portion of the acquisition by selling pieces of itself instead of borrowing billions. I think that was the right choice for a business that isn't yet profitable. But the choice has a cost, and it can be counted in shares.
Image source: Getty Images.
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Originally published at www.fool.com.