Is the Sale of United Launch Alliance Imminent?

Ultimately a sale isn't imminent because regardless of the management's decisions the sale has to be approved by the Federal Trade Commission and the Department of Justice, which will probably introduce glacial delays, but Eric Berger at Ars Technica has a piece up today that says two sources have told him Boeing and Lockheed Martin are "close to selecting a buyer for United Launch Alliance."  

The jointly owned rocket company, which was founded in 2006 and for a time had a monopoly on US government launch contracts, has been up for sale most of this year.

The sources say three buyers have emerged for the Colorado-based launch company. These include a private equity fund, the Jeff Bezos-owned space company Blue Origin, and a well-capitalized aerospace firm that is interested in increasing its space portfolio.

The possibility of it being a private equity firm isn't surprising, nor is it unprecedented.  The term "private equity" firm doesn't necessarily mean a Black Rock or other big name like that, although Ars doesn't mention the name of the firm.  Typically, they buy the company, help finance the launch company's restructuring, and then resell it.  

The surprise, if there is one, is that Blue Origin is among the three possible buyers. Berger looks at it a bit differently than I do because of having been more closely plugged into the right sources.

Blue Origin is also not a great surprise. The space company owned by Jeff Bezos has been rumored to be among the potential buyers for a while. Although there is some overlap between their launch plans, acquiring United Launch Alliance would give Bezos an orbital rocket and the guaranteed government contracts he covets. It would also benefit Amazon's need to launch its Project Kuiper satellites.

Ars is not naming the third company saying they were unable to verify the information from the inside sources.  ULA themselves deferred any questions about this to the two companies that own the joint venture, Lockheed and Boeing.  Who steadfastly refused to say anything.  

The ULA merger was formed by pushing from US security agencies in 2006, and that was to ensure a steady supply of Delta and Atlas launch vehicles for government payloads.  With guaranteed military launch contracts and large annual subsidies from the US Department of Defense to maintain "launch readiness," essentially subsidies for being there, they've always been a profit maker for both halves of the Alliance.

If any company is the embodiment of "old space" or "Space 1.0," though, it's ULA.  And as anyone who watches the shear number of launches climbing steadily over the last few years will tell you. Space 2.0 is on the verge of "eating their lunch."

In recent years, ULA's launch dominance has first been challenged and then supplanted by the rise of SpaceX and its less expensive and highly reliable Falcon 9 rocket. Bruno, who became ULA's chief executive in 2016, has slashed employee headcount and taken other steps to control costs, such as closing infrequently used launch pads.

However, Bruno's most important initiative has been the development of the large Vulcan rocket, which is intended to be more cost-competitive with the Falcon 9 and Falcon Heavy vehicles while also ending ULA's dependence on Russian-made rocket engines. The Vulcan launcher uses the BE-4 rocket engine manufactured by Blue Origin.

Their approach to reusability echoes the European Space Agencies in essentially saying "why spend that much money to develop a reusable booster?" Instead, they've talked about ejecting the engines out of a booster and recovering those - they're the most expensive part of the booster, after all.  

They think they can recover the engines using their “SMART (Sensible Modular, Autonomous Return Technology) Reuse” approach and get 2/3 of the benefit of landing the booster for much less developmental budget.

Of course, they're not going to do that now.  That's in a few years, after Vulcan is flying reliably and they get around to trying to get engine recovery to work.

Vulcan rolling into the launch complex for testing earlier this year.  Image credit: United Launch Alliance.

As we've talked about a few times, the first launch of Vulcan Centaur is currently set for NET Christmas Eve, now just under six weeks out.  Speculation is that if they agree to a sale, it probably doesn't have to wait until after that flight for ULA to announce it, although such an announcement would put a nice exclamation point on a successful flight.