Author Topic: Orbital and ATK’s Aerospace and Defense Groups to Combine in $5 Billion Merger  (Read 91651 times)

Offline Prober

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Just throwing this out there: Antares II with ATK composite liquid first stage with one NK-33/AJ-36 and several Delta-heritage SRBs for thrust augmentation. Removes Ukraine from the supply chain, allows them stretch existing NK-33 supplies for longer (until AJR makes new ones), and is is completely vertically integrated except for that engine.

My turn to throw something out:   When you listen to the webcast you hear the term "Vertical Integration"  Maybe this new company wishes to manufacture the AJ-26 in-house?   
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Offline Prober

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ATK can ask Orbital for a full interface description of the Antares first stage and see how close they can get to meeting that interface.  A few conversion boxes may be needed.

a.  ATK makes motors not stages.  Orbital already puts boxes on ATK motors for Pegasus, Taurus and Minotaur. 
b.  Dulles is not going to throw requirements over the fence for Utah to work.  Now they are one team, so ATK is not going to ask Orbital for anything.  If there is going to be a solid first stage for Antares, Orbital ATK will form a design team with people from Utah and Dulles facilities.

Sounds like you view this merger as a positive Jim?
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Offline jongoff

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ATK can ask Orbital for a full interface description of the Antares first stage and see how close they can get to meeting that interface.  A few conversion boxes may be needed.

a.  ATK makes motors not stages.  Orbital already puts boxes on ATK motors for Pegasus, Taurus and Minotaur. 
b.  Dulles is not going to throw requirements over the fence for Utah to work.  Now they are one team, so ATK is not going to ask Orbital for anything.  If there is going to be a solid first stage for Antares, Orbital ATK will form a design team with people from Utah and Dulles facilities.

Sounds like you view this merger as a positive Jim?

I can't speak for Jim, but I think there's a good chance this merger will be good for Orbital, and I agree with GO4TLI that a lot of the anti-ATK hyperbole on this thread is a little overblown. ATK had many good groups working on a wide range of satellite systems, subsystems, and robotic tools, as well as some small liquid propulsion (they worked with XCOR on the LOX/Methane engine they did several years back). Being able to vertically integrate launch and spacecraft is a good benefit for OSC. Is this going to revolutionize the launch industry? Probably not. But that doesn't mean that it isn't a good deal for OSC and ATK.

~Jon

Offline simonbp

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Being able to vertically integrate launch and spacecraft is a good benefit for OSC.

It is interesting that when Orbital got the CRS contract, a lot was made about just how horizontally integrated the Taurus II/Cygnus system was, in contrast to the completely vertically integrated SpaceX. It seems that that business model failed for them, and that now they really want to be vertically integrated.

Offline Prober

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Being able to vertically integrate launch and spacecraft is a good benefit for OSC.

It is interesting that when Orbital got the CRS contract, a lot was made about just how horizontally integrated the Taurus II/Cygnus system was, in contrast to the completely vertically integrated SpaceX. It seems that that business model failed for them, and that now they really want to be vertically integrated.

Think we missed it;  everyone thinks ATK Solid Rocket motors

But if you look at their web site, ATK is a manufacturer with many years of experience in many areas.  So now its very possible Orbital ATK can one way or another manufacture the AJ-26 or a clone of it.   The combined company could make the tankage, and the Cygnus.  For the CRS contract maybe 90% content.  Going to be very interesting to watch :D
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Offline john smith 19

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Think we missed it;  everyone thinks ATK Solid Rocket motors

But if you look at their web site, ATK is a manufacturer with many years of experience in many areas.  So now its very possible Orbital ATK can one way or another manufacture the AJ-26 or a clone of it.   The combined company could make the tankage, and the Cygnus.  For the CRS contract maybe 90% content.  Going to be very interesting to watch :D
You might like to peruse their catalogue.

http://www.atk.com/wp-content/uploads/2013/02/ATK-Motor-Catalog-2012.pdf

All are solid. No liquid capability at all. Orbital's is hypergolic thrusters and whatever they've learned launching Antares.

And since AFAIK the NK33 did not raise near the political stink the RD180 on the Atlas V did I'm not sure Orbital ATK can legally mfg anything, although on the Antares upgrade thread replace or restart NK33 mfg was my #1 pick for an upgrade.  :(
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Offline notsorandom

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Being able to vertically integrate launch and spacecraft is a good benefit for OSC.

It is interesting that when Orbital got the CRS contract, a lot was made about just how horizontally integrated the Taurus II/Cygnus system was, in contrast to the completely vertically integrated SpaceX. It seems that that business model failed for them, and that now they really want to be vertically integrated.
I don't think the horizontal integration strategy of Antares and Cygnus failed them. The system was has worked as designed and they have said it is profitable at the flight rate they are seeing. Orbital has been posting some good earnings as of late too.

Offline majormajor42

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Re: Orbital and ATK’s Aerospace and Defense Groups to Combine
« Reply #107 on: 04/30/2014 01:30 pm »
FWIW:
http://www.marketwatch.com/story/shareholder-alert-brodsky-smith-llc-announces-investigation-of-orbital-sciences-corp-orb-2014-04-29?reflink=MW_news_stmp

Quote
Following the spin-off, Orbital shareholders will receive only 0.449 shares of the remaining assets of ATK for each share of Orbital stock they own. The investigation concerns possible breaches of fiduciary duty and other violations of state law by the Board of Directors of Orbital for not acting in the Company's shareholders' best interests in connection with the merger. The transaction may undervalue Orbital as the Company stock have risen over 70% in the last year as a reflection of the Company's success in launching unmanned supply ships to the International Space Station.  In addition, following the merger the co-founder of Orbital will serve as the President and CEO of the merged company.

funny, while ORB is up 75% over 1yr, including yesterday's bump, they fail to mention ATK is up 103%!

I guess the relevant issue is whether this 45% 55% split is judged to be fair. My uneducated opinion is yes. Both companies have value. ATK slightly more. Lawsuits will happen, but I'm not seeing anyone here specifically saying that the weighting of the deal is bad for ORB.
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Offline Jim

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Think we missed it;  everyone thinks ATK Solid Rocket motors

But if you look at their web site, ATK is a manufacturer with many years of experience in many areas.  So now its very possible Orbital ATK can one way or another manufacture the AJ-26 or a clone of it.   The combined company could make the tankage, and the Cygnus.  For the CRS contract maybe 90% content.  Going to be very interesting to watch :D


Because that is true and it is not applicable to rocket engines.  ATK doesn't bring anything to the table when it comes to turbopump engines.

Offline JohnFornaro

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Now all eyes turn to Aerojet, the next shoe.

I'm gonna say bingo.

Also, interesting to note who the majority owner is, but whose name is listed first in the new company logo.

Maybe a poll on whether or not launch prices will fall?
Sometimes I just flat out don't get it.

Offline MP99

FWIW:
http://www.marketwatch.com/story/shareholder-alert-brodsky-smith-llc-announces-investigation-of-orbital-sciences-corp-orb-2014-04-29?reflink=MW_news_stmp

Quote
Following the spin-off, Orbital shareholders will receive only 0.449 shares of the remaining assets of ATK for each share of Orbital stock they own. The investigation concerns possible breaches of fiduciary duty and other violations of state law by the Board of Directors of Orbital for not acting in the Company's shareholders' best interests in connection with the merger. The transaction may undervalue Orbital as the Company stock have risen over 70% in the last year as a reflection of the Company's success in launching unmanned supply ships to the International Space Station.  In addition, following the merger the co-founder of Orbital will serve as the President and CEO of the merged company.

funny, while ORB is up 75% over 1yr, including yesterday's bump, they fail to mention ATK is up 103%!

I guess the relevant issue is whether this 45% 55% split is judged to be fair. My uneducated opinion is yes. Both companies have value. ATK slightly more. Lawsuits will happen, but I'm not seeing anyone here specifically saying that the weighting of the deal is bad for ORB.

Orb shares trading at $30.29 today.
http://finance.yahoo.com/q?s=ORB

Orb shareholders will receive 146.99 * 0.449 = $66.00 per Orb share
http://finance.yahoo.com/q?s=ATK (does not account for sporting goods element to be spun off)

Doesn't that give Orb shareholders twice their current value? BTW, IANA Financaial Advisor!!

cheers, Martin

Edit: rewritten.
« Last Edit: 04/30/2014 02:15 pm by MP99 »

Offline JohnFornaro

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Wowwwwwwwwwwww!

I would have seen an Orbital / SpaceX merger as a more likely play.  Maybe there will be an Orbital ATK / SpaceX merger someday.  Hmmm hmmm hmmm.
Why?

Their corporate cultures have "Government contractor" stamped bone DNA deep, complete with the relevant mindset regarding costs and schedules.

Musk knows big solids are the kiss of death for reusability and crew rating. Antares was never crew rated and never designed to carry a crew capsule.

So what would a merger with either of them give Spacex they actually want?

AFAIK the answer is nothing.

With one minor tweak, I totally agree.  Why would SpaceX merge with anybody?  (except Design / Program Associates, of course, but hey.)
Sometimes I just flat out don't get it.

Offline JohnFornaro

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Having read Chris' article, I think maybe StratoLaunch could be the main beneficiary of this merger.
Sometimes I just flat out don't get it.

Offline MP99

In the merger, ATK shareholders will own approximately 53.8% of the equity of the combined company and Orbital shareholders will own approximately 46.2%.

Market Cap: 1.85B http://finance.yahoo.com/q?s=ORB
Market Cap: 4.70B http://finance.yahoo.com/q?s=ATK (does not account for sporting goods element to be spun off)

Doesn't that mean the market cap should be roughly 1.85B + 4.70B = 6.55B?

ATK (yes, with sporting goods) is ~72% of the combined cap, yet it gets them "53.8% of the equity of the combined company".

"Orbital shareholders will own approximately 46.2%" despite apparently bringing ~28% of the value to the party.

How big is that sporting goods division?

I'm not sure I see why this company is complaining. It's obvious that IANAFA!!

cheers, Martin
« Last Edit: 04/30/2014 02:28 pm by MP99 »

Offline R7

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This definitely solidifies Antares propulsion. Pun intended.
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Offline Chris Bergin

Having read Chris' article, I think maybe StratoLaunch could be the main beneficiary of this merger.

Firstly, thanks for reading! :) Secondly, it's certainly very good news for that system. It'll be a lot more than just that, but you've worked out the reason I highlighted that one, along with Antares.
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Offline jongoff

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Being able to vertically integrate launch and spacecraft is a good benefit for OSC.

It is interesting that when Orbital got the CRS contract, a lot was made about just how horizontally integrated the Taurus II/Cygnus system was, in contrast to the completely vertically integrated SpaceX. It seems that that business model failed for them, and that now they really want to be vertically integrated.

To me the vertical integration that helps is doing the spacecraft and the rocket. The vertical integration of doing every part of the rocket in-house may be less critical.

~Jon

Offline jongoff

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Think we missed it;  everyone thinks ATK Solid Rocket motors

But if you look at their web site, ATK is a manufacturer with many years of experience in many areas.  So now its very possible Orbital ATK can one way or another manufacture the AJ-26 or a clone of it.   The combined company could make the tankage, and the Cygnus.  For the CRS contract maybe 90% content.  Going to be very interesting to watch :D
You might like to peruse their catalogue.

http://www.atk.com/wp-content/uploads/2013/02/ATK-Motor-Catalog-2012.pdf

All are solid. No liquid capability at all. Orbital's is hypergolic thrusters and whatever they've learned launching Antares.

And since AFAIK the NK33 did not raise near the political stink the RD180 on the Atlas V did I'm not sure Orbital ATK can legally mfg anything, although on the Antares upgrade thread replace or restart NK33 mfg was my #1 pick for an upgrade.  :(

While I doubt that ATK has enough of the relevant experience to build and qualify a sophisticated large liquid-fueled rocket engine like NK33, they do have a liquid division--or at least they did. XCOR worked with ATK's liquids group (based out of somewhere in upstate NY IIRC) back 5-7yrs ago on the large LOX/Methane engine for NASA.

So while I agree with your overall point (skepticism that ATK is going to all of the sudden start cranking-out NK-33 class staged combustion LOX/Kero engines anytime soon), I think you overstate your case on their lack of liquids capabilities.

~Jon

Offline Coastal Ron

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I can't speak for Jim, but I think there's a good chance this merger will be good for Orbital, and I agree with GO4TLI that a lot of the anti-ATK hyperbole on this thread is a little overblown.

I think a lot of anti-FILL IN THE BLANK type hyperbole is more directed at the management of companies, and not the companies themselves, although that distinction may not be easy to see in the various conversations.  For ATK, they make a lot of great hardware, and must have lots of smart, hard working people.  However their management may sometimes be perceived as being a consummate player of the "how can I squeeze as much money from the U.S. Government as possible" game, which is where negative comments may come from.

As to the merger, I think it makes a lot of sense from a business standpoint, and should make Orbital's launch and space hardware more competitive in the future.
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Offline kevin-rf

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The vertical integration will certainly help them from a profitability standpoint. A more profitable company is a stronger company.

Or as I look at it, a new space company has gobbled up an old space company :)
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