Viasat and Inmarsat expect to realise $1.5bn in synergies from their merger.
Viasat will acquire Inmarsat in a $7.3bn deal, that brings together two major satellite operators with businesses in broadband, mobility, and defence.
Under the terms of the agreement, Inmarsat’s shareholders will receive $850m in cash, subject to adjustments, and approximately 46.36m newly issued Viasat shares valued at $3.1bn, based on the closing price of $67.00 per Viasat share on November 5, 2021. At closing, on a pro forma basis, Inmarsat shareholders are expected to be issued shares representing an aggregate of 37.5% of Viasat stock on a fully diluted basis, with each of the existing Inmarsat shareholders receiving shares representing less than 10%.
Buying private equity-backed Inmarsat would transform US-based Viasat into an operator of 19 satellites across Ka, L and S-band spectrum with another 10 spacecraft set to launch in the next three years for a market that has been shaken up by SpaceXs Starlink and other incoming megaconstellations.
The combined company intends to integrate the spectrum, satellite and terrestrial assets of both companies into a global high-capacity hybrid space and terrestrial network, capable of delivering superior services in commercial and government sectors. This advanced architecture will create a framework incorporating the 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 airports and shipping hubs and lower latency at a lower cost than either company could provide alone.
Viasat has advanced North American residential and aviation connectivity and defence communications with technology and business models embraced by customers.
Inmarsat is preparing to expand its global network later this year with its advanced software-defined commercial communications satellites ever, offering both Ka- and L-band capabilities.
Speaking about the acquisition, Mark Dankberg, Executive Chairman of Viasat, added: “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. Inmarsat’s dual-band global mobile network, unique L-band resources, skills and capabilities in the UK 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.”
Rajeev Suri, CEO of Inmarsat, added: “Joining with Viasat is the right combination for Inmarsat at the right time. 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, the enhanced scope for partners and new opportunities for employees. The industrial logic is compelling and ensures that the UK has a strong and sustainable presence in the critical space sector for the long term.”
Rick Baldridge, Viasat’s president and CEO stated: “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. 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 organisation for long-term success.”
Viasat plans to build on Inmarsat’s presence in the UK and is committed to preserving and growing the investment of the combined company in UK space communications, as well as supporting the recently published National Space Strategy. The combined company will cooperatively engage with the UK government with a view to operating in the UK consistent with the commitments previously made by Inmarsat/Connect BidCo. 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 the Asia Pacific.