PARIS -- Space Exploration Technologies Corp.
Chairman Elon Musk said his purchase of 10 percent of
small-satellite specialist Surrey Satellite Technology Ltd. (SSTL) will give SpaceX a window on the thinking of the world's most
successful vendor of small, inexpensive spacecraft and ultimately could provide
business for SpaceX.
Musk said
in an interview that he and SSTL reached an agreement on the 10 percent equity
stake in about a month. The deal will give Musk a seat on SSTL's
board but does not include any guarantee that future SSTL satellites will use SpaceX's Falcon vehicles.
The maiden
flight of the Falcon rocket is scheduled for March.
Musk and
SSTL Chief Executive Officer Sir Martin Sweeting said
the investment should be seen as a marriage of two similar corporate cultures
more than a financial deal. Both said SpaceX's 10
percent purchase will not lead, at least in the short term, to a larger stake
taken by the El Segundo, Calif., rocket maker.
"They could
have accepted investments from just about anyone I think," Musk said. "SSTL is
a high-quality company that is probably the world leader in small satellites.
We look at this as more a case of similar corporate cultures getting together.
For now there is nothing firm about working together. But when you have two
companies that see the world in the same way, they can usually figure out
things to do together."
SpaceX is
trying to do for space-launch vehicles what SSTL has been doing for 24 years
with satellites: prove that a vastly less-expensive alternative to today's
technology is feasible.
SSTL is
owned by the University of Surrey in Guildford, England. After Musk's purchase, the
university will have an 84 percent stake in the company. SSTL employees hold
the remaining 6 percent of SSTL's shares.
With 23
satellites built and launched since 1981 and nine on order, SSTL has created a
business out of making satellites that commonly cost less than $10 million
each. The company posted a pretax profit of 1.3 million British pounds on
revenues of 18 million British pounds for the fiscal year ending July
31, 2004.
The company has been growing at an annual rate of more than 15 percent for the
past couple of years and is forecasting a pretax profit of 1.7 million British
pounds on sales of 25 million pounds.
SSTL has
sought inexpensive launchers in many parts of the world and was among the first
to use Russian and Ukrainian ballistic missiles that were being taken out of
service and made available as orbital vehicles. Sir Martin said the company
will continue to hunt for launcher deals wherever they occur. But he said that
for the U.S. government, which has been an SSTL
customer in the past and may be again, only a U.S.-based rocket
is acceptable. That is one reason why SSTL wanted a U.S. partner. The company's financial
condition is such that it did not need new investment.
"We had about a half-dozen potential
investors," Sir Martin said. He declined to name them and also declined to say
how much SpaceX paid for its 10 percent stake. "The
deal with SpaceX was done more on the basis of
strategic vision. Elon and I have a good relationship,
and we wanted the relations between our two companies to be more of a
marriage."
Sir Martin
said SSTL engineers have
investigated the design of the SpaceX Falcon rocket
and concluded that it could deliver on its promise of radically reducing the
cost of space access. But Sweeting also said that
Musk's personal fortune, made in the Internet and software sector, is a crucial
component of SpaceX's chance of success.
"I've
watched a lot of launchers come and go, and it is often the financing that
stops them," Sir Martin said. "Elon is the first guy
to come along with pockets deep enough to get over the hump. He's also got some
very good people working with him, including some former SSTL people."
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