16 Jul 2019
Virgin Galactic merger brings commercial space travel closer
BY Andy Knaggs
Virgin Galactic believes it has the necessary financial muscle to reach commercialisation with its proposed space tourism flights, after merging with investment partnership Social Capital Hedosophia (SCH).
The transaction, which is due to complete during the second half of 2019, will deliver US$1.3bn (€1.16bn, £1.04bn) of equity to Virgin Galactic, made up of US$1bn (€890m, £800m) in common stock of the combined company (at US$10 per share) and up to US$300m (€266.86m, £240.78m) in cash consideration.
It will leave the current shareholders of SCH with 49 per cent of the combined company, and current Virgin Galactic shareholders with 51 per cent, and results in Virgin Galactic stocks becoming publicly listed on the New York Stock Exchange – the first commercial human spaceflight company to be publicly traded.
In connection with the deal, SCH founder Chamath Palihapitiya has agreed to invest a further US100m (€88.97m, £80.26m) at US$10 per share when the transaction completes.
The existing Virgin Galactic management team will remain in place, with George T. Whitesides as CEO, while a new board of seven directors will include Palihapitiya as chair and Adam Bain, lead independent director of SCH.
"This transaction represents the next step of our exciting journey," said Whitesides. "We believe it will offer us the financial flexibility to build a thriving commercial service and invest appropriately for the future."
Virgin Galactic has already taken around US$80m in deposits from more than 600 people on the waiting list for commercial space flights. It has been granted an FAA commercial space launch licence, has successfully sent its VSS Unity spaceship into two crewed test spaceflights, and is moving its operational headquarters to Spaceport America in New Mexico – the world's first purpose-built commercial spaceport.
In an investor presentation reported in SpaceNews, the company also raised the possibility of its technology being used for high-speed, point-to-point transportation, revealing that a "Virgin Hypersonic Jet" could travel at Mach 5, enabling trips from Los Angeles to Tokyo in just two hours, rather than the 11 hours it takes today – a significant global revenue opportunity, it said.
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