Vector Acquisition Corporation

Vector Acquisition Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: Rocket Lab

ENTERPRISE VALUE: $4.1 billion
ANTICIPATED SYMBOL: RKLB

Vector Acquisition Corporation to combine with Rocket Lab USA, Inc. (“Rocket Lab” or “the Company”), a global leader in launch and space systems. The transaction is estimated to be completed in Q2 2021 and, at that time, Vector will change its name to Rocket Lab USA, Inc. and the combined company will trade under the Nasdaq ticker symbol RKLB.

Rocket Lab is transforming the way we use and access space by delivering end-to-end solutions across the launch and space systems markets. Since the Company’s first orbital launch in 2018, its innovative Electron launch vehicle has become the second most frequently launched U.S. rocket annually. To date, Rocket Lab has delivered 97 satellites to orbit for more than 20 public and private-sector organizations and technology-leading constellation operators. Rocket Lab’s customer base is evenly split across government and commercial organizations including the National Aeronautics and Space Administration (NASA), the National Reconnaissance Office (NRO), and the Defense Advanced Research Projects Agency (DARPA), as well as commercial satellite leaders. As the first company to deliver regular and reliable dedicated launch services for small satellites, Rocket Lab has also played a leading role in catalyzing the growth of the commercial small satellite industry. The satellites launched by Rocket Lab enable operations in national security, Earth observation, space debris mitigation, weather and climate monitoring, communications and scientific research.

Rocket Lab has an established space systems business that develops satellite and spacecraft solutions for a range of commercial and government missions, from low-Earth orbit constellations to high-complexity deep space and interplanetary missions. Rocket Lab’s Photon spacecraft family delivers a satellite-as-a-service solution that eliminates the typical high cost, time and complexity customers face when building their own satellites. With Rocket Lab, customers can buy a launch, satellite, ground services and on-orbit management as a turn-key package, resulting in a disruptive reduction in cost and time to orbit. Rocket Lab has an operational Photon in orbit, with additional missions to the Moon, Mars and Venus planned. In 2021, Rocket Lab will employ Electron and Photon to launch a satellite to lunar orbit for NASA to serve as a precursor for Gateway, a Moon-orbiting outpost that is part of NASA’s Artemis program to return humans to the lunar surface.


TRANSACTION

  • The transaction reflects an implied pro forma enterprise value of $4.1 billion for Rocket Lab, representing 5.4x 2025 projected revenue of approximately $750 million.
  • The transaction is expected to result in pro forma cash on the balance sheet of approximately $750 million through the contribution of existing cash estimated to be on Rocket Lab’s balance sheet prior to close, up to $320 million of cash held in Vector Acquisition Corporation’s trust account (assuming no redemptions by Vector’s public shareholders), and a concurrent approximately $470 million PIPE of common stock, priced at $10.00 per share and led by Vector Capital, BlackRock and Neuberger Berman, among other top-tier institutional investors.
  • Following the closing of the transaction, the Company will continue to be led by Founder and CEO Peter Beck. Alex Slusky, CEO of Vector and CIO and Founder of Vector Capital, will join Rocket Lab’s Board of Directors alongside Sven Strohband of Khosla Ventures, David Cowan of Bessemer Venture Partners, Matt Ocko of DCVC and Mike Griffin, independent director.

Vector Transaction Overview


PIPE

  •  $470 million PIPE of common stock, priced at $10.00 per share and led by Vector Capital, BlackRock and Neuberger Berman, among other top-tier institutional investors.

EARNOUT

Company Earnout Shares” shall mean the product obtained by multiplying (i) the Exchange Ratio Second Surviving Corporation Common Stock by (ii) eight percent (8%).

Exchange Ratio Second Surviving Corporation Common Stock” shall mean the quotient obtained by dividing (i) the Base Purchase Price by (ii) (a) an amount equal to $10.00 plus (b) an amount equal to (1) the interest earned on funds in the Trust Account divided by (2) the number of shares of Delaware Parent Common Stock outstanding immediately prior to the First Merger (excluding any shares issued upon conversion of the Parent Class B Ordinary Shares).

Company Earnout Period” shall mean the time period beginning on the date immediately following the 90th day following Closing Date and ending on and including the 180th date following the Closing Date.

Company Triggering Event” shall mean the first date on which the Common Share Price is equal to or greater than $20.00 after the Closing Date, but within the Company Earnout Period; provided, that

  • (i) in the event of a Change of Control during the Company Earnout Period pursuant to which Parent’s stockholders receive, or have the right to receive, cash, securities or other property attributing a value of at least $20.00 to each share of Second Surviving Corporation Common Stock (as agreed in good faith by Sponsor and the board of directors of Parent), then Company Triggering Event shall be deemed to have occurred and
  • (ii) in the event that, and as often as, the number of outstanding shares of Second Surviving Corporation Common Stock is changed by reason of any dividend, subdivision, reclassification, recapitalization, split, combination, exchange or any similar event, then the applicable Common Share Price threshold (i.e., $20.00) will, for all purposes of this Agreement, in each case be equitably adjusted to reflect such change.

LOCKUP

  • Certain Rocket Lab stockholders will enter into a lockup agreement with Pubco pursuant to which they will agree not to transfer, sell or assign their shares of Pubco Common Stock for six months following the Closing.
  • Vector Acquisition Partners, L.P. (the “Sponsor”) has agreed not to transfer, sell or assign its shares of Pubco Common Stock received in connection with the Business Combination until the earliest of:
    • (a) one year after the Closing and
    • (b) subsequent to Closing,
      • (x) if the closing price of the Pubco Common Stock equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after Closing, or
      • (y) the date on which Pubco completes a liquidation, merger, share exchange or other similar transaction that results in all of its public stockholders having the right to exchange their common stock for cash, securities or other property.

NOTABLE CONDITIONS TO CLOSING

  • The aggregate cash proceeds from Vector’s trust account, together with the proceeds from the PIPE Financing (as defined below), equaling no less than $500,000,000 (after deducting any amounts paid to Vector shareholders that exercise their redemption rights in connection with the Business Combination but before the payment of any transaction costs of Vector and Rocket Labs).

NOTABLE CONDITIONS TO TERMINATION

  • By either Vector or Rocket Lab if the Business Combination is not consummated by November 30, 2021

ADVISORS

  • Morgan Stanley & Co. LLC is serving as sole financial advisor to Rocket Lab.
  • Goodwin Procter LLP serving as legal counsel to Rocket Lab.
  • Morgan Stanley & Co. LLC is also acting as the lead placement agent for Vector on the PIPE and capital markets advisor.
  • Deutsche Bank Securities is serving as sole financial advisor and capital markets advisor to Vector as well as placement agent on the PIPE.
  • Kirkland & Ellis LLP serving as legal advisor.

MANAGEMENT & BOARD


Executive Officers

Alex Slusky, 53
Chief Executive Officer and Chairman

Mr. Slusky founded Vector Capital in 1997 and has more than 25 years of investing and operating experience in technology companies. He has deep technical experience in both private and public technology companies and has successfully invested across multiple market cycles including the 1998?—?2000 Internet bubble and the 2008?—?2009 financial crisis. Prior to founding Vector Capital, Mr. Slusky led the technology equity practice at Ziff Brothers Investments, managing a portfolio of public and private technology investments which later became Vector Capital I. Prior to Ziff, Mr. Slusky spent three years at New Enterprise Associates (NEA), where he focused on venture investments in software, communications, and digital media. Mr. Slusky began his career at Microsoft and McKinsey & Company.


David Fishman, 49
President

Mr. Fishman joined Vector Capital in 2006 and has more than 20 years of investing and transactional experience in technology companies. Prior to joining Vector, Mr. Fishman spent ten years at Goldman, Sachs & Co. where he was a Managing Director in the Mergers and Acquisitions division and focused on technology and media transactions. Mr. Fishman has extensive transaction expertise, having consummated approximately 30 mergers and acquisitions during his tenure at Goldman, worth an aggregate value of $110 billion, including transactions involving Microsoft, eBay, Adobe, IBM, Oracle, and PeopleSoft.


David Baylor, 61
Chief Financial Officer

Mr. Baylor joined Vector Capital in 2008 and has more than 30 years of operating experience, including as a senior executive at a publicly traded company. Prior to joining Vector, Mr. Baylor was the Chief Operating Officer and Chief Financial Officer at Thomas Weisel Partners where he was a member of the Executive Committee. Prior to Thomas Weisel Partners, Mr. Baylor was a Managing Director with Montgomery Securities, a securities attorney with Howard, Rice, Nemerovski, Canady, Falk & Rabkin, and a certified public accountant with Deloitte & Touche.


 

Board of Directors

John Herr, 53
Director

Mr. Herr is a seasoned technology executive with more than 25 years of experience in the cloud, consumer internet, e-commerce, new media, and financial services sectors, and has an exceptional track record of scaling technology businesses into large enterprises. Mr. Herr currently serves as a professional director and previously served as Chief Executive Officer of Avetta from March 2015 to October 2019 and under his leadership, the company experienced significant revenue growth and transformed from break-even to highly profitable. Prior to Avetta, Mr. Herr served as CEO of Adaptive Insights, where he was responsible for meaningful revenue growth during his four-year tenure. Adaptive was ultimately sold to Workday for over $1.5 billion. Mr. Herr has also held executive roles at EZ Shield, eBay, PayPal, and Buy.com. He currently serves on the Board of Directors of Planful, a Vector Capital portfolio company, and WineAccess.com.


David Kennedy, 50
Director

Mr. Kerr is the co-founder and a Partner at Serent Capital, a San Francisco-based lower-middle market private equity firm focused on service and technology businesses. During his 12-year tenure at Serent Capital, Mr. Kennedy has built a successful track record investing in high growth technology companies. Prior to co-founding Serent Capital in 2008, Mr. Kennedy was President and Chairman of ServiceSource (NASDAQ: SREV), a Business Process Outsourcing software company that served many of the world’s leading technology companies. Under Mr. Kennedy’s leadership, ServiceSource grew revenues, profits, and employees and oversaw strong shareholder returns. Previously, David was a consultant at McKinsey & Company in London, Dublin, and San Francisco, and an Operations Manager at HJ Heinz in Central & Eastern Europe.