Kirkland & Ellis, Goodwin Procter advise on Vector Capital SPAC merger with Rocket Lab

Kirkland & Ellis has advised Vector Acquisition, the special purpose acquisition company (SPAC) launched by tech-focused PE firm Vector Capital, on its merger with space launch company Rocket Lab, advised by Goodwin Procter. 

The go public merger provides Rocket Lab, a rival to Elon Musk’s SpaceX, with $750m in cash and sees it nearly triple its 2018 valuation of $1.4bn to $4.1bn. It is the latest of a string of deals forged by ‘blank-cheque’ companies, which have surged in popularity raising a record $25bn in the first eight months of 2020.

Kirkland Houston-based corporate partner Sean Wheeler, who advised on the deal, said the NewSpace industry was proving very attractive to SPACs. “Investors want to be part of something new, big and ambitious like the space industry. Companies in this industry are tapping into existing and projected demand for access to space. The customers of the NewSpace pioneers are also appreciative that there is less reliance on government action in the NewSpace market, which is really about safety, customer service, fast turnaround and reusability.”  

Also on the Kirkland team was fellow Houston partner Debbie Yee, who added: “One of the benefits of SPAC is that offer targets attract valuations based on a belief in the business model and its ability to generate substantial revenue in the future if not in the present. This is why we are seeing such prominent use of SPACs in the tech space, as tech companies often recoup investment with significant revenue and earnings further down the line.”

The Kirkland team also included partners Travis Distaso and Cephas Sekhar and associates Sami Ghubril, Alon Takac, Alan Radegan, Charles Inclan and Soheil Ebadat. They were assisted by tax partner David Wheat, associate Nicole (Dressler) Martin, capital markets partner Christian Nagler, technology and IP transactions partner John Lynn, executive compensation partner Rohit Nafday and employee benefits partner Alexandra Mihalas. The Goodwin team was led by Jocelyn Arel, Daniel Adams and David Johanson from the firm’s Silicon Valley and Boston offices.  

A group of 39 investors including Vector Capital, BlackRock and Neuberger Berman have committed to participate in the transaction through a private investment in public equity (PIPE) of approximately $470m. Current Rocket Lab shareholders will own 82 percent of the pro forma equity of the combined company.  

Morgan Stanley served as sole financial and capital markets advisor to Rocket Lab, with Deutsche Bank Securities serving the same function for Vector. Both also served as placement agents on the PIPE.

Previous SPAC mergers include Virgin Galactic’s July 2019 merger with Social Capital Hedosophia, a SPAC created by VC firm Social Capital. Skadden Arps Slate Meagher & Flom acted as legal advisor to Social Capital Hedosophia with Latham & Watkins stepping in for Virgin Galactic.

Last October Kirkland announced it was advising Stable Road Acquisition, a SPAC sponsored by an affiliate of Stable Road Capital, on its combination with in-space transportation and infrastructure services provider Momentus, advised by Orrick.

Then, in February, launch vehicle company Astra announced it was merging with Pendrell Holicity Holdings-sponsored SPAC Holicity, advised by Ropes & Gray and Winston & Strawn respectively.

Rocket Lab's merger with Vector Capital is expected to close in Q2 2021, upon which the company will be publicly listed on the Nasdaq under the ticker RKLB and hold the full name Rocket Lab USA.