Viasat to Acquire Inmarsat in $7.3B Satellite Industry Consolidation Deal
Viasat will acquire Inmarsat in a $7.3 billion deal that brings together two major satellite operators with businesses in broadband, mobility, and defense. Viasat announced the deal Monday which entails $850 million in cash, 46.36 million Viasat shares valued at $3.1 billion, assuming $3.4 billion of net debt.
The combined company will have a spectrum license portfolio across the Ka-, L-, and S-bands and a fleet of 19 satellites in service, with an additional 10 satellites to come in the next three years. Viasat and Inmarsat said this combination will bring about new services in fixed and mobile segments including broadband and narrowband, IoT services. They plan to integrate the spectrum, satellite and terrestrial assets of both companies into a global high-capacity hybrid space and terrestrial network.
This acquisition comes amid a time of change about Inmarsat. About eight month ago, the company suddenly replaced longtime CEO Rupert Pearce with former Nokia CEO Rajeev Suri, which set off a slew of leadership changes and business plans. Over the past few months, Inmarsat has appointed new leaders for marketing and communications, commercial, strategy, maritime, and aviation, and announced plans for a mobility-focused Low-Earth Orbit (LEO) constellation called Orchestra.
In a call with investors on Monday, Suri said the acquisition was “the right combination at the right time,” and offers significant synergy opportunities. “It is clear the satellite market is entering a new era when it comes to market demands. This deal offers scale and scope to address that,” he said.
Suri said Inmarsat has moved fast since he joined, and pointed to the Orchestra and Elera initiatives. He also said that Inmarsat improved its second quarter revenues, increasing 24% year over year.
The two companies in 2021 are projected to have $4.1 billion in combined revenue and the new company will have more than 8,000 employees. Inmarsat is projected to have $1.3 billion of revenues in 2021, and Viasat is projected to have $2.8 billion in revenues this year.
Viasat Executive Chairman Mark Dankberg pointed to the fact that the total addressable markets that the two companies could exploit goes from $985 billion in 2020 to a possible $1.6 trillion in 2030. The consumer market alone in 2030 could be worth over $900 billion according to Viasat/Inmarsat estimates.
Dankberg spoke of strong potential in existing markets such as energy, aviation, fixed broadband, and government, as well as new opportunities in markets such as digital inclusion, security, and land mobility including air taxis and delivery drones. He said Inmarsat will help reinforce Viasat’s strong government position, and that it will enable the company to become a bigger player in maritime markets like cruise.
Viasat is gearing up to launch its ViaSat-3 constellation composed of three Ka-band GEO satellites in 2022 that will deliver broadband service to residential, aviation, and government transport users. In terms of how this acquisition affects Viasat’s outlook on LEO, Dankberg said: “LEO makes a good augmentation for GEO for dealing primarily with latency advantage that it has for low latency traffic. There is a lot of opportunity to do even better than LEO over the land, where most of the demand is using air-to-ground.”
Dankberg said he thinks there is a place for LEO, and Viasat will be in tune with what customers want, and cost-conscious. “We have a way to deal with it, either through working with partners or using our own assets. But we are not going to try and fit everything into a one size fits all, or a one technology fits all solution.”
The transaction is subject to regulatory approval and is expected to close in the second half of 2022. At this stage, there was little detail regarding management roles going forward. Viasat said Inmarsat’s management team is expected to work through the transition, but leadership decisions for the combined company will be made after the deal close “as part of the integration planning process.”
Viasat also committed to build on Inmarsat’s presence in the United Kingdom, where the company is headquartered.
This acquisition follows after Inmarsat became a private company with a $3.4 billion buyout in 2019 from Triton Bidco, a consortium of private equity funds including Apax Partners, Warburg Pincus International, and Canada Pension Plan Investment Board. The consortium offered $7.21 in cash per Inmarsat share.