On Monday, U.S. listed communications giant Viasat announced that it will buy global mobile satcom counterpart Inmarsat in a deal valued at $7.3 billion.
The combined company will integrate both companies’ spectrum, satellite and terrestrial assets into a global high-capacity hybrid space and terrestrial network, serving fast-growing commercial and government sectors. This advanced architecture will create a framework incorporating the most favorable characteristics of multi-band, multi-orbit satellites and terrestrial air-to-ground systems that can deliver higher speeds, more bandwidth, greater density of bandwidth at high demand locations like airport and shipping hubs and lower latency at lower cost than either company could provide alone.
According to this morning’s announced of the deal, Viasat will pay $850 million will be paid in cash, and issue approximately 46.36 million newly issued Viasat shares valued at $3.1 billion, based on last Friday’s closing price of $67.00 per Viasat share. Additionally, Viasat has obtained financing commitments for $2.3 billion of new debt facilities required to complete the deal, some of which will be raised between signing and closing to fund Viasat’s standalone growth expenditures. Viasat also plans to assume $2.1 billion in principal amount of Inmarsat senior secured bonds and $1.7 billion outstanding under Inmarsat’s $2.4 billion of senior secured credit facilities.
Rationale
Viasat has advanced North American residential and aviation connectivity and defense communications with technology and business models that it notes has been embraced by customers.
For its part, Inmarsat has an exceptional presence in the growing global mobility segment and is at the forefront of network design with a recently announced multi-dimensional mesh network. It is preparing to expand its global network later this year with its most powerful and advanced software-defined commercial communications satellites ever, offering both Ka- and L-band capabilities. Inmarsat has a global presence, a robust distribution channel spanning the rapidly growing mobility, government, IoT and enterprise sectors and currently provides safety and connectivity services to more than one million mobility and defense platforms.
The combined company’s portfolio of spectrum licenses will span the Ka-, L- and S-bands and include a a fleet of 19 satellites in service with an additional 10 spacecraft under construction and planned for launch within the next three years. Its global Ka-band footprint will include planned polar coverage, to support bandwidth-intensive applications, augmented by L-band assets to support all-weather resilience and highly reliable, narrowband and IoT connectivity.
“This is a transformative combination that advances our common ambitions to connect the world. The unique fusion of teams, technologies and resources provides the ingredients and scale needed for profitable growth through the creation and delivery of innovative broadband and IoT services in new and existing fast-growing segments and geographies,” said Viasat’s Executive Chairman Mark Dankberg. “Inmarsat’s dual-band global mobile network, unique L-band resources, skills and capabilities in the U.K. and excellent technical and operational talent worldwide, are powerful complements to Viasat’s business. Together, we can advance broadband communications and create new hybrid space and terrestrial networks that drive greater performance, coverage, speed, reliability and value for customers. We look forward to welcoming the Inmarsat team into the Viasat family.”
“Joining with Viasat is the right combination for Inmarsat at the right time,” said Inmarsat CEO Rajeev Suri. “Viasat is a terrific innovator and Inmarsat brings some powerful additions: global reach, a broad distribution channel, robust business momentum and a presence in highly attractive global mobility segments. Together, the two companies will create a new global player with the scale and scope to help shape the future of a dynamic and growing industry. The combination will create a strong future for Inmarsat and be well-positioned to offer greater choice for customers around the world, enhanced scope for partners and new opportunities for employees. The industrial logic is compelling and ensures that the U.K. has a strong and sustainable presence in the critical space sector for the long term.”
“This strategic move gives Viasat the scale to increase the pace of innovation that drives new and better services for our customers, broadens the opportunities for our employees and provides a foundation for significant positive free cash flow, with potential upside from a revitalization of L-band and IoT service growth,” said Viasat President and CEO Rick Baldridge. “Plus, we will have expanded scale and presence in the $1.6 trillion broadband and IoT sectors. I’m excited about the opportunities ahead and looking forward to setting up the combined organization for long-term success.”
Viasat plans to build on Inmarsat’s presence in the U.K. and is committed to preserving and growing the investment of the combined company in U.K. space communications, as well as supporting the recently published National Space Strategy. The combined company will cooperatively engage with the U.K. government with a view to operating in the U.K. consistent with the commitments previously made by Inmarsat/Connect BidCo, and expects continued constructive engagement across the U.K.’s thriving innovation ecosystem.
It further intends to work closely with the U.K. government to bring additional space capabilities and other advanced technologies to the country as well as long-term, highly skilled engineering and related jobs for U.K.-based employees. Viasat plans to preserve and grow Inmarsat’s London headquarters, as well as its footprint in Australia and Canada and across Europe, the Middle East, Africa and Asia Pacific.
