By Ben Dummett 

Satellite maker Terran Orbital Corp. is merging with a special-purpose acquisition company to go public at a $1.58 billion valuation, the companies said, the latest in a string of space-related companies to list through a SPAC.

Florida-based Terran designs and builds satellites for customers including the National Aeronautics and Space Administration, the U.S. Defense Department and EchoStar Corp., a provider of satellite and internet communication services.

Terran is developing its own constellation of low-Earth-orbit satellites, with plans to launch next year and targeting customers such as shippers that need to track their vessels and governments monitoring conflict zones.

Terran, founded in 2013, is merging with Tailwind Two Acquisition Corp., a SPAC listed on the New York Stock Exchange and led by Casper Sleep Inc. Chief Executive Philip Krim.

Several space companies have gone public through SPAC mergers, which offer some advantages over traditional initial public offerings for early-stage companies with scant track records. They are tapping into investors' expectations that space travel for business, tourism and research will get much cheaper in the coming years.

Today, insurance companies, for example, can afford to map out rooftops in Florida the day before a hurricane hit and the day after to protect themselves against insurance fraud, said Terran Chief Executive Marc Bell in an interview. "That couldn't happen 10 years ago because the satellite technology was too expensive," he said.

Virgin Orbit, a satellite-launching startup backed by British billionaire Richard Branson, in August agreed to merge with a blank-check company in a $3.2 billion deal that included an investment from Boeing Co. Shares of the SPAC, NextGen Acquisition Corp. II, are up 3.6% since the deal was announced.

SPACs raise money by going public and then have a set period, usually two years, to hunt for an acquisition target. They were hot investments early this year then faded in popularity after many companies that went public this way struggled to meet their business targets.

Terran's Mr. Bell is unfazed. SPACs offer a faster way than the traditional route of an initial public offering and offer greater certainty of the deal closing, he said.

The Tailwind merger gives Terran access to about $345 million held by the SPAC. It will also get $125 million in additional funds from investors including Lockheed Martin Corp., an existing Terran investor and customer, and private-equity firms AE Industrial Partners and Francisco Partners.

Mr. Bell said the money would be used to expand Terran's two manufacturing plants in California while it builds a new, bigger facility in Cape Canaveral, Fla., over the next three years. Florida's government has contributed $300 million to that project, which Terran says will be able to produce more than 1,000 satellites annually.

Write to Ben Dummett at ben.dummett@wsj.com