Made in SPACs: Redwire to Take Space 3D Printing to NYSE via SPAC

You might be growing tired of the neologism “SPACtacular” by now, but it’s hard to avoid when there are new merger deals with special purpose acquisition companies (SPACs) occurring in the 3D printing industry on a near weekly basis. Just last week, 3D printing service bureau Shapeways told the world it was going to use a SPAC to launch an IPO. The latest is that of Redwire with Genesis Park Acquisition Corp. (NYSE: GNPK). The company, which acquired space 3D printing pioneer Made In Space in June 2020, announced a definitive merger agreement with Genesis Park that will be completed by the second quarter of 2021.

Redwire is an interesting entity, in that it was the creation of private equity firm AE Industrial Partners, formed when AEI acquired space firms Adcole Space and Deep Space Systems (DSS) in 2020 to form Redwire. AEI was established in 1998 with a focus on investing in middle market aerospace companies.

“As an innovative space infrastructure leader, Redwire is set to power a new age of space travel, exploration and commerce,” said Kirk Konert, Partner at AE Industrial Partners. “With this transaction, Redwire will have even greater opportunities to drive growth and value by delivering tailored, responsive solutions for its growing customer base across the public and private sectors.”

Redwire’s formation heralds a promising future for its success in the new space industry. Made In Space has achieved significant milestones in the world of space manufacturing, including the installation of two 3D printers on the International Space Station, in-space fiber optics pulling, material recycling, and metal 3D printing. A long-term goal of the firm is the additive construction of large-scale objects, such as satellites, in space through its Archinaut program.

DSS and Adcole Space, founded in 2001 and 1957 respectively, have been important parts of the space industry. The former has developed and managed space systems, including spacecraft parts, for such storied programs as the Space Shuttle and ISS. The latter has developed satellite technology that has been involved in hundreds of space programs, including missions to Mercury, Mars, Jupiter, Saturn and Pluto.

With all of these firms under one roof, the Archinaut project doesn’t seem so out of reach at all. Altogether, Redwire has over 50 years of space flight experience, more than 150 missions flown, and over 100 patents. It now describes itself as a “space infrastructure and services” company and “the leading developer of on-orbit servicing, assembly and manufacturing (‘OSAM’) capabilities.”

“Space-based capabilities and services are improving lives on Earth every day, and Redwire is an invaluable mission partner, providing technology that has been at the forefront of space infrastructure from the beginning. Today, the influx of private capital, new public sector space initiatives and decreased launch costs are driving tremendous growth in the space industry, which is projected to exceed $2 trillion by 2040,” said Peter Cannito, Chairman and CEO of Redwire. “With our extensive space flight heritage and deeply innovative capabilities, we are accelerating humanity’s expansion into space by delivering reliable, economical and sustainable infrastructure for future generations. As we enter this second golden age of space, Redwire is supplying the picks and shovels that enable nearly every space mission, supporting initiatives to help us better understand our planet, transform our space security infrastructure, and move humanity deeper into our solar system. We are thrilled to enter into this business combination with Genesis Park. With their extensive aerospace, operational and financial expertise and strong industry relationships, we are confident that Genesis Park is the right partner to propel Redwire’s growth in the public market.”

The company points to several revenue streams for the short and long terms, citing “more than $150 million in contracted backlog” for products and services for “national security, civil and commercial customers.” It believes it will achieve a “72% estimated revenue compound annual growth rate, from $163 million in 2021 to $1.4 billion in 2025.”

Existing Redwire shareholders will hold about 55 percent of fully diluted shares of common stock, with AEI retaining its role as a significant shareholder. Regarding the specifics of the deal:

“The transaction values Redwire at a $615 million pro forma enterprise value, representing 9.6x estimated 2023 Adjusted EBITDA of approximately $64 million and 2.5x estimated 2025 Adjusted EBITDA of approximately $250 million. Assuming no redemptions by Genesis Park stockholders, the Proposed Transaction is expected to deliver approximately $170 million cash to the Redwire balance sheet. The proposed transaction is further supported by a $100 million fully committed and oversubscribed PIPE of common stock, priced at $10.00 per share, with participation by Senvest Management, LLC and Crescent Park Management, L.P.”

Chairman and CEO of Redwire Peter Cannito will continue to lead the firm, with the Redwire Board consisting of existing Redwire Board members Pete Cannito, Reggie Brothers, Joanne Isham and Kirk Konert. President, CFO & Director of Genesis Park Jonathan Baliff will also be on the board, alongside John Bolton, Advisor to Genesis Park, and Les Daniels, Operating Partner of AE Industrial Partners.

“We intended to find a profitable partner with strong management, powerful intellectual property and impressive organic growth. Redwire achieves that vision by transforming the future of space infrastructure and services at a time when the space industry is on the brink of exponential growth. Redwire is a proven, solidly profitable player in the space community and the undisputed leader in on-orbit 3D printing, servicing, assembly, and manufacturing. We also believe there is significant opportunity to accelerate growth through strategic combinations in the fragmented space landscape. Redwire has established itself as a first-mover consolidator and an acquirer of choice, and we believe its position will be further improved as a public company,” said Paul Hobby, CEO and Director of Genesis Park. “We are very excited about Redwire’s growth potential and we look forward to partnering with Peter and his team as they help usher in this new era of space exploration.”

The notes its organic growth capabilities, with plans to drive this growth by investing in five specific areas meant to “expand the utilization of space and promote a sustainable low-earth orbit economy.” Those areas are: “(i) on-orbit servicing, assembly and manufacturing; (ii) low Earth orbit commercialization; (iii) digitally engineered spacecraft; (iv) space domain awareness; and (v) advanced sensors and components.”

The funding that will go along with the IPO will also allow Redwire to acquire more players in the space, as the company notes “[s]ignificant opportunity to continue consolidating a fragmented space infrastructure market: The proceeds from the proposed transaction enable Redwire to accelerate and de-risk growth plans and pursue targeted acquisitions.” An acquisition of Rocket Lab is out of the question, since that firm is launching its own SPAC IPO, but that doesn’t mean that other additive-focused startups are out of the question, such as Launcher or Relativity Space. For ideas of other possible acquisitions in the space industry, you can take a look at 3DPrint.com’s Space Zone.