By Joey Roulette and Mike Stone
WASHINGTON (Reuters) -Boeing and Lockheed Martin (NYSE:LMT) are in talks to sell their rocket-launching joint venture United Launch Alliance to Sierra Space, two people familiar with the discussions said.
A deal could value ULA at around $2 billion to $3 billion, the sources said.
A deal to sell ULA, a major provider of launch services to the U.S. government and a top rival to Elon Musk's SpaceX, would mark a significant shift in the U.S. space launch industry as ULA separates from two of the largest defense contractors to a smaller, privately held firm.
The potential sale comes after years of speculation about ULA's future and failed attempts to divest the joint venture over the past decade. In 2019, Boeing (NYSE:BA) and Lockheed Martin reportedly explored selling ULA but couldn't agree on terms with potential buyers.
The negotiations could end without a deal, the sources said.
ULA referred Reuters to Boeing and Lockheed for comment. The two companies said they do not comment on market speculation. Sierra did not immediately return a request for comment.
Jeff Bezos' Blue Origin and Cerberus Capital Management had placed bids in early 2023 for the company, according to people familiar with the negotiations. Rocket Lab had also expressed interest, two people said. None of those discussions led to a deal. Rocket Lab could not be immediately reached.
A potential deal would be an ambitious move for Sierra Space, spun off from Sierra Nevada Corp in 2021 to focus on bringing to market its long-delayed Dream Chaser spaceplane and building a private space station habitat with Blue Origin. Sierra Space has weighed a public offering.
A potential deal could accelerate deployment of its crewed spaceflight business, analysts said. A ULA acquisition, they said, would give the company in-house access to launch vehicles that could send its spaceplane and space-station components into Earth's orbit, rather than spending hundreds of millions of dollars for those launches as a customer.
For Boeing, the potential sale of ULA represents a strategic move under new CEO Kelly Ortberg, who took the helm in August. A deal would allow Boeing to concentrate on its core aerospace and defense businesses while reaping some cash from ULA's sale.
ULA was formed in 2006 as a consolidation of Boeing's and Lockheed's dueling rocket businesses, ending years of competition between the two and cementing their grip on government launch services - the primary mission of the joint venture's founding charter.
The rise of SpaceX and its reusable Falcon 9, which galvanized a satellite industry seeking cheaper access to space, forced ULA to phase out its decades-old Atlas (NYSE:ATCO) and Delta rockets for its new, cheaper Vulcan rocket that made its debut launch in 2023.
But ULA has faced challenges in scaling Vulcan production and upping its launch rate to meet commercial demand and fulfill contract obligations with the Space Force, which in 2021 picked Vulcan for a sizable chunk of national security missions alongside SpaceX's Falcon fleet.
A sale of ULA would unshackle the company from Boeing and Lockheed, whose boards have long resisted ideas from ULA to expand the business beyond rockets and into new competitive markets such as lunar habitats or maneuverable spacecraft, according to former executives.