Why Boeing Is Investing In Richard Branson-Owned Virgin Orbit's $3.2B SPAC Deal

Sir Richard Branson's Virgin Orbit, a launch and space solutions company, announced Monday it has entered into a definitive agreement to become a publicly-traded company through the SPAC route. The company also said the Boeing Co BA is among its PIPE investors.

What Happened: Virgin Orbit will merge with NextGen Acquisition II Corp NGCA, a SPAC, in a deal valuing the former at $3.2 billion.

Upon closing, the proposed deal will provide the combined company up to $483 million in cash proceeds. This includes $383 million of cash held in the trust account of NextGen and a $100 million fully committed PIPE financing.

Virgin Orbit expects to be listed on the Nasdaq under the ticker symbol VORB. The deal will likely close around the end of the year.

The company noted that its PIPE investors included Boeing and AE Industrial Partners, in addition to an existing investor in the company and NextGen.

Virgin Orbit has developed proprietary air-launch technology and it has manufacturing infrastructure and personnel to facilitate space access for its customers.

Related Link: Morgan Stanley Upgrades Boeing On Being 'Ready For Takeoff'

Why Boeing Is Interested: Boeing's own space program has been a non-starter. The company has faced issues with faulty designs, software errors and inflated costs, while also failing to win recent NASA contracts for lunar landing and resuming science experiments on the. moon.

In early August, Boeing's Starliner space capsule flight was postponed due to issues with a component in its propulsion system.

The magnitude of Boeing's investment in Virgin Orbit is not known.

Boeing has a longstanding association with the Virgin Group and it has invested in Virgin Galactic Holdings Inc SPCE, the Wall Street Journal reported, citing a Boeing spokesperson. Virgin Galactic is Branson's space tourism company.

"We believe in the importance of the satellite launch market and the capabilities Virgin Orbit brings to the industry," the spokesperson reportedly said.

At last check Monday, Boeing shares were up 2.55% to $218.09.

Related Link: ARKX Isn't The First Space ETF: Here's How The Others Have Performed

Photo: Courtesy Virgin Orbit