Well that was fast!
Barely one month ago I described the latest developments at Maxar Technologies, the space technology company taken private by private equity firm Advent back in 2022 -- how Advent had split Maxar into two halves, renamed each of them, and appeared to be preparing them both for initial public offerings (IPOs).
Turns out I was at least half wrong about the IPO plans, but in a good way.
Last week we learned that, instead of spinning off the subsidiary it had renamed Lanteris, Advent has decided to sell that company outright. And the company that's buying Lanteris is none other than the space pioneer that has now successfully landed two American spacecraft on the moon (including the first American spacecraft to land there since the Apollo program ended.
Its name: Intuitive Machines (LUNR +10.05%).
Image source: NASA.
Intuitive Machines gets bigger
The Advent subsidiary that Intuitive Machines has its eye on is called Lanteris. It used to be called Maxar Space Systems (and before that, it was the Canadian space company MDA, and before that it was known as Space Systems Loral).
Whatever you want to call it, Lanteris is a specialist in building satellites and spacecraft for servicing satellites in-orbit. For a company like Intuitive Machines, which is helping NASA build a satellite communications network between the Earth and the moon, this could make Lanteris an invaluable addition -- improving Intuitive's chances of being able to collect on a contract that could be worth $4.8 billion over 10 years.
NASDAQ: LUNR
Key Data Points
Costs...
But how much will it cost Intuitive Machines to take control of Lanteris?
As the company explains in its press release announcing the acquisition, Intuitive will pay $800 million in total for Lanteris, of which $450 million will be paid in cash, and the remaining $350 million in Intuitive Machines stock.
At a share price of almost exactly $10 as I write this, that will work out to 35 million shares of LUNR stock -- about 30% stock dilution for shareholders. That's a significant cost. For every $1 Intuitive Machines earns in future years, it means current shareholders will get $0.30 less. For this deal to make sense, shareholders will want to be certain Lanteris is bringing significant benefits along with it.
Luckily, it seems to do just that.
...and benefits
According to data from S&P Global Market Intelligence, Intuitive Machines itself generated $226 million in revenue over the last 12 months. Management says total revenue after adding Lanteris to the mix will exceed $850 million annually. Thus, we can assume that Lanteris is bringing with it a revenue stream of at least $625 million.
This gives us two ways to look at the acquisition of Lanteris. Looked at one way, Intuitive Machines, which has an implied market capitalization of $1.7 billion despite having revenue of only $226 million (i.e., a price-to-sales ratio of 7.5), is paying $800 million for Lanteris and its $625 million revenue stream -- a 1.3 P/S ratio.
That sounds like a very good deal to me.
The second view is similar. For an $800 million investment, Intuitive Machines is about to nearly quadruple its own revenue stream. After this merger goes through, the $1.7 billion company will boast annual revenue of $850 million, lowering Intuitive Machines' P/S ratio to just 2.
And according to my research, 2 times sales is a very cheap price for a space stock.
The upshot for investors
Leave aside Intuitive Machines' arguments that buying Lanteris will grow it from a "lunar company" into a "multi-domain space prime, setting the pace for how the industry's next generation will operate." Discount Intuitive's assertion that buying Lanteris will open a path to winning Golden Dome and missile defense contracts, and to participation in such high-profile projects as Artemis, lunar terrain vehicle services (LTVS), and missions to Mars.
From a purely financial perspective, buying Lanteris for $800 million is quite simply a steal of a deal for Intuitive Machines. So long as the acquisition takes place on schedule and goes off as planned (a Q1 2026 closing date is expected), I think this is a great deal for Intuitive Machines -- stock dilution notwithstanding.
