Viasat to acquire Inmarsat in multi-billion deal
Viasat Inc. is to acquire Inmarsat in a transaction valued at $7.3bn. The two firms announced the definitive agreement today (November 8th) which comprises of $850m in cash, approximately 46.36m shares of Viasat common stock valued at $3.1bn based on the closing price on Friday (November 5th) and the assumption of $3.4bn of net debt.
The company created by the combination is to integrate the assets of both firms including spectrum, satellite and terrestrial services. This means that the new company can incorporate the best characteristics of both firms and in turn deliver higher speeds, more bandwidth, greater density of bandwidth and lower latency at lower cost.
Viasat’s executive chairman Mark Dankberg, said: “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.”
The combined company plans to offer a broadened range of spectrum licences across the Ka-, L- and S-bands and a fleet of 19 satellites in service with an additional 10 spacecraft under construction.
It will also have a global Ka-band footprint, including planned polar coverage, to support bandwidth-intensive applications.
Rajeev Suri, CEO of Inmarsat, said: “Joining with Viasat is the right combination for Inmarsat at the right time. 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 UK has a strong and sustainable presence in the critical space sector for the long term.”
Under the terms of the agreement, Inmarsat’s shareholders will receive $850m in cash, subject to adjustments, and approximately 46.36 million newly issued Viasat shares valued at $3.1 billion, based on the closing price of $67.00 per Viasat share at the end of last week. At closing, on a pro forma basis, Inmarsat shareholders are expected to be issued shares representing 37.5% of Viasat stock on a fully diluted basis.
Viasat estimates that the combined company has the potential for mid-teens percentage revenue and Adjusted EBITDA [spell out] growth with a fully funded path to positive free cash flow. Combined operating and capital expenditure alone are expected to create $1.5bn on an after-tax NPV basis.
Viasat has obtained financing commitments for $2.3bn of new debt facilities to complete this transaction. Viasat also plans to assume $2.1bn in principal amount of Inmarsat senior secured bonds and $1.7bn outstanding under Inmarsat’s senior secured credit facilities.
Viasat has also obtained commitments of $3.2bn to backstop certain amendments required under Viasat’s $700m credit facility, $88.4m outstanding under Viasat’s ex-$Im credit facility and Inmarsat’s $2.4bn of senior secured credit facilities.
The transaction has been unanimously approved by the boards of directors of both Viasat and Inmarsat. In addition, The Baupost Group, Viasat’s largest shareholder, has agreed to vote in favour of the deal.
PJT Partners is serving as financial advisor to Viasat. Whilst Latham & Watkins LLP and Linklaters are serving as its legal advisors.
Barclays, J.P. Morgan Securities plc and Trinity Advisers are acting as financial advisors to Inmarsat. And Kirkland & Ellis, Clifford Chance and Steptoe & Johnson LLP are serving as legal advisors to Inmarsat and its majority shareholders.