Boeing and Lockheed Martin in Talks to Sell ULA to Sierra Space for Up to $3 Billion

Boeing and Lockheed Martin are negotiating the sale of their rocket-launch joint venture, United Launch Alliance (ULA), to Sierra Space in a deal potentially valued at $2 billion to $3 billion. The transaction could significantly reshape the U.S. space launch industry, separating ULA from two of the largest defense contractors.

Boeing and Lockheed Martin Eye $3 Billion ULA Sale to Sierra Space, Potentially Reshaping Space Launch Sector

Two sources with knowledge of the negotiations have disclosed that Boeing and Lockheed Martin are in the process of selling their rocket-launching joint venture, United Launch Alliance, to Sierra Space.

According to the sources, a transaction could cost ULA approximately $2 billion to $3 billion.

A deal to sell ULA, a significant provider of launch services to the U.S. government and a top rival to Elon Musk's SpaceX, would represent a substantial change in the U.S. space launch industry. Reuters says this would result in ULA's separation from two of the biggest defense contractors and its acquisition by a smaller, privately held firm.

The potential transfer follows years of speculation regarding ULA's future and unsuccessful attempts to divest the joint venture over the past decade. Boeing and Lockheed Martin purportedly investigated the possibility of selling ULA in 2019 but needed help to reach an agreement with prospective purchasers.

According to sources, the negotiations may conclude without a signed agreement.

ULA directed Reuters to Boeing and Lockheed for comment. The two companies stated that they do not provide commentary on market speculation. Sierra should have responded to a request for comment.

According to individuals informed of the negotiations, Cerberus Capital Management and Blue Origin, which Jeff Bezos owns, submitted proposals for the company in early 2023. Two sources said Rocket Lab had also expressed interest. No agreement was reached due to those discussions, and Rocket Lab was unavailable for immediate communication.

A potential agreement would be a bold step for Sierra Space, separated from Sierra Nevada Corp in 2021, to concentrate on developing its Dream Chaser spaceplane and constructing a private space station habitat in partnership with Blue Origin. Sierra Space has been considered a public offering.

Analysts have suggested that a potential agreement could expedite the deployment of its crewed spaceflight enterprise. They stated that acquiring ULA would provide the company with in-house access to launch vehicles that could propel its spaceplane and space station components into Earth's orbit rather than incurring hundreds of millions of dollars in costs as a customer.

Boeing's prospective sale of ULA is a strategic move under the leadership of new CEO Kelly Ortberg, who assumed the role in August. Boeing could focus on its primary aerospace and defense businesses while also generating revenue from the sale of ULA through a deal.

ULA's Sale Could Free the Company from Boeing and Lockheed's Constraints, Boost Vulcan Production

ULA was established in 2006 due to the consolidation of Boeing and Lockheed's rival rocket businesses. This event marked the end of years of competition between the two companies. It solidified their control over government launch services, which was the primary objective of the joint venture's founding charter.

The satellite industry's pursuit of more affordable access to space was energized by the emergence of SpaceX and its reusable Falcon 9, which necessitated the retirement of ULA's decades-old Atlas and Delta rockets in favor of its new, more cost-effective Vulcan rocket, which was launched in 2023.

However, ULA needs to increase Vulcan production and launch rate to meet commercial demand and fulfill its contractual obligations with the Space Force. In 2021, the Space Force selected Vulcan for many national security missions and SpaceX's Falcon fleet.

According to former executives, a sale of ULA would free the company from the constraints of Boeing and Lockheed. Boeing and Lockheed's boards have consistently opposed ULA's efforts to diversify its operations beyond rockets into new competitive markets, such as maneuverable spacecraft or lunar habitats.