Virgin Galactic to merge with already publicly traded Social Capital Hedosophia in US$1.3bn deal

by | Jul 9, 2019 | Commercial human spaceflight, Finance, Seradata News, Space tourism

Space tourism operator Virgin Galactic (VG) and the investment partnership, Social Capital Hedosophia (SCH) announced on 8 July that they had agreed a deal that will see SCH shareholders own approximately 49 per cent of the new combined Virgin Galactic. The merger is expected to be completed before the end of 2019, subject to approval from public shareholders of SCH.

The joint entity will be the world’s first publicly-traded commercial human spaceflight company, avoiding the need for an IPO, as Social Capital Hedosophia Holdings, a partnership between investment firms Social Capital and Hedosophia, is already publicly traded.

The merger is being led by Chamath Palihapitiya, CEO and Chairman of SCH and Founder and Managing Partner of Social Capital.

 

 

The current owners of VG will receive US$1.3 billion, made up of US$1 billion of common stock in the combined company and up to US$300 million in cash. Chamath Palihapitiya is investing an additional US$100 million in the transaction and will become the Chairman of the new company. Current VG CEO George T. Whitesides is expected to remain as CEO of the new entity.

Comment by David Todd: Seradata believes that space tourism has a strong future – especially once lunar space tourism begins. However, we remain sceptical about the attractiveness of suborbital space tourism, which, at a rate of circa US$20,000 per minute in microgravity, seems relatively poor value for money for its clients. As it is, unlike its surviving Blue Origin competitor (the XCOR Lynx small rocket plane dropped out) Virgin Galactic’s participant carrying SpaceShipTwo has only breached the old US Air Force 50-mile limit for space, rather that the “official” Karman line at 100 km. The original smaller SpaceShipOne rocket plane did, of course, breech the 100 km line, winning it the Ansari X-prize, which makes one wonder whether Virgin Galactic would have been better off sticking with that in the first place.

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