Look who is supposedly buying Boeing and Lockheed Martin’s space business now!

America’s space industry was supposed to undergo a major change in 2023. As several news outlets reported at the time, the United Launch Alliance (ULA) joint venture between Boeing (BA 2.98%) and Lockheed Martin (LMT -0.11%) was for sale, with a transaction likely to take place before the end of the year.

It didn’t happen.

It doesn’t matter, the experts said. As 2023 turned into 2024, ULA was still for sale. Until SpaceX arrived, after all, ULA was the nation’s largest rocket launcher carrying NASA and national security satellites. Even after SpaceX arrived, it was still number 2. (Well, until The rocket labit was.) Sure someone would they happily pay the $2 or $3 billion it would take to buy ULA in 2024?

Except 2024 is three quarters over and so far, at least, no one has.

Image source: Getty Images.

The ULA looks incredibly cheap, so why isn’t anyone buying it?

And yet, as Reuters reported last month, ULA is still for sale. And the sale price is still reported to be in the neighborhood of $2 billion to $3 billion.

This is probably a bargain price. As we explained in 2023, ULA generated $1.3 billion in sales in 2022 before a launch vehicle transition caused the launch rate to drop in 2023. However, as 2024 continues, the release rate is already increasing again. With four launches in the bag so far, ULA has already put more rockets into orbit in 2024 than it did in all of 2023. In addition, a large order book populated by launches for AmazonULA’s Kuiper project means ULA’s launch rate (and revenue) is only increasing.

It shouldn’t be too long before ULA is earning at its usual rate, or better. At the usual valuation for space stocks of 3 or 4 times annual sales, that means ULA should be worth $4-5 billion.

In any logical world, that should mean someone will step up and buy ULA eventually.

Wanted: A buyer for ULA

And here’s the thing: Reuters thinks someone might be looking to buy ULA. Curiously, however, the company Reuters believes is now in talks to bid for ULA is a company that no one even thought was in the running when this sale process began: Sierra Space.

You remember Sierra Space. It is a subsidiary of the private defense company Sierra Nevada Corporation. It’s the company I described as “a $5 billion space unicorn” in 2023 and a potential IPO candidate. And according to Reuters, it is the leading contender to buy ULA from Boeing and Lockheed, while other bidders such as Blue Origin and Rocket Lab are on the sidelines. As the press agency notes, both Blue Origin and Rocket Lab (and several others) have expressed interest in buying ULA in the past, but none of these negotiations have resulted in a deal.

As to whether this new negotiation will succeed where others have failed, however, that remains very unclear. Asked to comment on the report, Sierra Space, Boeing and Lockheed Martin declined or did not respond.

Will Sierra Space Buy United Launch Alliance?

Usually, that wouldn’t mean much. Refusal to comment on a pending purchase before ultimately proceeding and achievement that purchase is standard operating procedure for large corporations. (See Dish’s recent sale to DirecTV for a very recent example.) But in this particular case, that’s not the only reason to be skeptical that any talks will actually lead to a deal.

Unless and until it does an IPO, Sierra Space will likely be broke and unable to make a big offer to buy ULA — certainly not as big a bid as Blue Origin, backed by billionaire. Indeed, by the end of 2023, Sierra Space was reported to have laid off workers to save cash. Meanwhile, his cash on hand is likely needed for the multiple space projects he is already involved in, which include developing modules for a proposed private space station, building missile warning satellites for the Pentagon, and preparing his Dream Chaser space plane for a ( long delayed) first flight in 2025.

Of course, I could be wrong about that. I really hope I’m wrong, because if Sierra Space were to buy ULA first and then IPO the combined company, for example, then that would give space investors like me exactly what we’re looking for: an opportunity to invest in a company. the size and capacity of SpaceX, which is also publicly traded.

Such a scenario could happen eventually. I just don’t think Sierra Space is the company to make it happen.