This is more than twice the price that a private-equity consortium paid for Inmarsat less than two years ago.
Viasat will take the company over from the consortium of Apax Partners, Warburg Pincus, and two Canadian pension funds, the CPP Investment Board and the Ontario Teachers’ Pension Plan. They bought Inmarsat in December 2019 for $3.4 billion.
At the time Inmarsat rejected a last-minute offer of $6 billion from Oaktree.
In a call with investors this morning, Rick Baldridge, CEO of Viasat, said he expected the deal to close in the second half of 2022 – though he admitted to a questioner that it could be longer: as much as 18 months to get through international regulators.
Viasat, based in Carlsbad, California, said its offer comprised $850 million in cash, approximately 46.36 million shares of Viasat common stock valued at $3.1 billion based on the closing price last Friday, and the assumption of $3.4 billion of net debt.
Viasat’s CFO, Shawn Duffy, said in the investor call that Inmarsat has annual revenue of $1.3 billion, and Viasat is more than twice that, giving a combined revenue of $4.1 billion.
She said that about 40% of the combined revenue will come from governments, with 28% from mobile customers, including aviation and maritime, and 21% from fixed users. Viasat is heavily US-oriented in terms of revenue and the combination will still have about 70% of its revenue from North America.
Duffy pointed out that both companies were coming to the end of a period of high capital investment: the two have 10 satellites under construction on top of the 19 they have in service between them.
Rajeev Suri (pictured), the former Nokia CEO who became CEO of Inmarsat as recently as March 2021, said in the call: “This is the right combination at the right time,” and said that Viasat will be able to “build on Inmarsat’s strong distribution channels”. He said: “The industrial logic is compelling.”
Suri noted that the satellite market is “highly fragmented”, with new entrants coming in. He, and the other executives involved in the call, avoided mentioning low Earth orbit (LEO) projects such as SpaceX’s Starlink, OneWeb and Amazon’s Project Kuiper.
Mark Dankberg, executive chairman of Viasat, said the combined company would take advantage of “evolving multi-orbit space solutions”. Answering questions he said that LEO “makes a good augmentation to GEO [geostationary] satellites”. He said: “There’s a lot of opportunity to do even better than LEO when it comes to air-to-ground.” But, he accepted, perhaps grudgingly, “there’s a place for LEO”.
In comments prepared earlier Dankberg called the plan a “a transformative combination”, sand aid: “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.”
Suri said: “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.”
The two said in the morning’s announcement that the combination “will create a leading global communications innovator with enhanced scale and scope to affordably, securely and reliably connect the world”.
They pointed to “the complementary assets and resources of the new organisation [that] will enable the availability of advanced new services in mobile and fixed segments, driving greater customer choice in broadband communications and narrowband services”, including the internet of things (IoT).
Dankberg committed in the call with analysts to retaining Inmarsat’s London headquarters, saying the combined company would “preserve and grow” it, as well as the company’s presence in Australia, Canada, Europe, the Middle East, Africa and the Asia-Pacific region. The company will continue to support the UK’s national space strategy, he said.
