Karman Space & Defense has completed the acquisition of Five Axis Industries, a specialized manufacturer of engine subsystems for the commercial space sector. The transaction, valued at $88 million, is aimed at enhancing Karman's capabilities in advanced propulsion and launch system technologies.
The deal consists of $83 million in cash and approximately $5 million in Karman common shares. This strategic purchase integrates Five Axis's specialized engineering and manufacturing expertise directly into Karman's growing platform, positioning the company for expanded influence in the space supply chain.
Key Takeaways
- Karman Space & Defense acquired Five Axis Industries in an $88 million deal.
- The acquisition strengthens Karman's capabilities in mission-critical space propulsion systems.
- Five Axis brings proprietary technologies, including 3D-printed Inconel components.
- The deal is expected to be immediately accretive to Karman's revenue, margins, and cash flow.
A Strategic Move in Space Propulsion
The acquisition of Five Axis Industries represents a significant step for Karman Space & Defense to solidify its role as a key supplier for the space and defense markets. Five Axis, founded in 2002 and based in Arlington, Washington, has developed a strong reputation for its work on critical engine components.
The company specializes in manufacturing subsystems that operate in the highly corrosive and high-temperature environments of launch vehicle engines. This includes spun-form nozzles, gaseous oxygen systems, and various fluid control technologies that are integral to the performance of several major space engine programs.
By bringing Five Axis into its portfolio, Karman gains complementary and highly technical capabilities. The integration is expected to create vertically integrated solutions that can tackle complex challenges in modern engine design and production, from initial concept to final assembly.
Expanding Technical Capabilities
A key aspect of this acquisition is the addition of Five Axis's proprietary technologies to Karman's intellectual property portfolio. This includes advanced techniques related to 3D-printed Inconel components, a high-performance superalloy well-suited for extreme propulsion environments. This technology, combined with Karman's existing advanced spin-forming capability, provides a more comprehensive manufacturing solution for its customers.
Details of the Transaction
The $88 million acquisition was financed through a combination of cash and stock. To facilitate the deal, Karman recently expanded its Term Loan B facility, increasing it from $370 million to $505 million. The additional capital was used to fund the transaction and repay the company's existing revolving credit facility.
Karman's leadership has expressed confidence that the acquisition will deliver immediate financial benefits. The company stated that the addition of Five Axis will be accretive across several key financial metrics, including revenue growth, adjusted EBITDA margins, and overall cash flow.
"We are thrilled to add Five Axis to the Karman family. This acquisition strengthens our core competency in the engineering and manufacturing of mission-critical subsystems for the space market," said Tony Koblinski, Chief Executive Officer of Karman Space & Defense.
Koblinski further described Five Axis as a "unique asset within the space supply chain" whose expertise is a natural extension of Karman's existing platform.
Advisors on the Deal
Several financial and legal firms advised on the transaction, ensuring a smooth process for both parties.
- For Karman: RBC served as the primary financial advisor, with Citi acting as the junior bookrunner. Legal counsel was provided by Willkie Farr & Gallagher LLP.
- For Five Axis: KAL Capital acted as the exclusive financial advisor.
Future Outlook and Industry Impact
The integration of Five Axis is expected to create new opportunities for Karman to grow and enhance its value proposition to customers. The combined entity will be better equipped to deliver comprehensive solutions for the demanding requirements of space launch systems.
Five Axis Industries at a Glance
- Founded: 2002
- Headquarters: Arlington, Washington
- Specialization: Advanced engine subsystems for commercial space
- Key Products: Spun-form nozzles, gaseous oxygen systems, fluid control technologies
In his statement, Koblinski also welcomed the Five Axis team to Karman. "We look forward to working together to deliver even more value to our customers as we continue executing on our mission to be the nation’s leading merchant supplier of advanced space and defense technologies," he added.
This acquisition reflects a broader trend of consolidation within the aerospace and defense supply chain, as companies seek to build more robust, vertically integrated capabilities to serve an expanding commercial space market. By securing specialized manufacturing expertise, Karman is positioning itself for sustained growth and innovation in a competitive industry.