Viasat buys Inmarsat in $7.3 billion transaction

Consideration made up of assuming $3.4 billion in debt, $3.1 billion in Viasat stock, and $850 million in cash.
Written by Chris Duckett, Contributor
Image: Viasat

Viasat announced on Monday it will acquire the UK-based Inmarsat in a $7.3 billion transaction, which is comprised of assuming $3.4 billion of debt from Inmarsat, parting with $3.1 billion or almost 46.4 million shares in Viasat stock, and paying $850 million in cash.

Expected to close in the latter half of 2022, Viasat said it would expand its board to 10 seats, with the current Inmarsat chair to take one spot, and Inmarsat shareholders to select the other. Inmarsat shareholders will own 37.5% of Viasat when the deal is closed.

The combined entity would have a fleet of 19 satellites in service with another 10 under construction, a global Ka-band footprint and L-band assets and licences for all-weather narrowband and IoT connectivity. Viasat added it would introduce its beamforming, end-user terminal, and payload technologies to "unlock greater value" in Inmarsat's L-band space assets.

Joint revenue would be $4.1 billion, with 45% of that coming from governments, and $1.4 billion in EBITDA posted. The combined company would have over 8,000 workers at more than 90 offices around the world.

"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 fast-growing commercial and government sectors," Viasat said.

"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."

In July, Inmarsat took the wraps off a network it claimed would be able to combine 5G, low orbit, and geostationary satellites. Dubbed Orchestra, the company said it would need to invest in the order of $100 million over five years to get the network off the ground, as well as launch a constellation of 150-175 low-Earth orbit satellites. Work would also begin on a terrestrial network.

One benefit of the system would be the ability to mesh connectivity at terminals, with the example put forward being a ship connected to a 5G tower forwarding capacity to other vessels "beyond terrestrial reach".

"Joining with Viasat is the right combination for Inmarsat at the right time," CEO of Inmarsat Rajeev Suri said.

"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 industrial logic is compelling and ensures that the UK has a strong and sustainable presence in the critical space sector for the long term."

Viasat said following the deal, the combined revenue would be "more diverse, resilient and global" and there was a fully funded part to positive free cash flow.

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