Swarm discussed the planned acquisition in filings with the Federal Communications Commission (opens in new tab) Friday (Aug. 6), saying in the documentation that the companies inked a merger deal on July 16. The terms will see Swarm operate as a wholly owned subsidiary of SpaceX, the filings state. The filing was first reported by SpaceNews (opens in new tab).
The acquisition may be an indicator of a quickly consolidating market for broadband satellite operations, as indicated in other examples cited in the FCC filings. Among cited industry competitors: Spire Global plans to go public via a $1.6 billion special-purpose acquisition company (opens in new tab), Astrocast is considering a public listing (opens in new tab), and Orbcomm is undergoing a $1.1 billion acquisition (opens in new tab) by equity firm GI Partners.
Related: SpaceX's Starlink satellite megaconstellation launches in photos
That said, SpaceX is acquiring a rather small competitor, making its value unclear to the larger company's investors. Swarm has a constellation of 120 satellites, according to numerous media reports, compared to SpaceX's estimated operational constellation of 1,624 Starlinks; the latter figure is according to estimates (opens in new tab) by Harvard University astrophysicist Jonathan McDowell. SpaceX hopes to operate as many as 42,000 satellites eventually, should all its plans meet FCC approval.
Since Swarm's constellation and Starlink operate in different frequency bands, the revenue generation path from the Swarm constellation is not clear for SpaceX aside from gaining staff expertise. However, Crunchbase estimates Swarm has less than 50 people on staff (opens in new tab), a small fraction of SpaceX's estimated employee base of nearly 10,000 people. SpaceX, Swarm indicated in the filings, will "benefit from access to the intellectual property and expertise developed by the Swarm team, as well as from adding this resourceful and effective team to SpaceX."
For Swarm, however, the merger will bring it to the deep-pocketed SpaceX after raising (according to Crunchbase) nearly $28 million independently in funding. "Swarm's services will benefit from the better capitalization and access to resources available to SpaceX, as well as the synergies associated with acquisition by a provider of satellite design, manufacture, and launch services," the FCC filings stated.
The SpaceNews report (opens in new tab)pointed out that during a webcast in March, Swarm Technologies said the $25 million they had recently raised in a Series A funding was adequate to launch its planned network of 150 satellites.
Follow Elizabeth Howell on Twitter @howellspace. Follow us on Twitter @Spacedotcom and on Facebook.