Inmarsat Acquisition: Key Details, Impact, and What Comes Next

Viasat's acquisition of Inmarsat marks a significant milestone in the satellite communications industry. This merger, completed on May 31, 2023, combines the strengths of both companies to enhance global connectivity. The integration aims to drive growth, innovation, and reliability in satellite services, positioning the new entity as a formidable player in the competitive market.

What Is Inmarsat?

Founded in 1979, Inmarsat specializes in mobile communication services, offering a comprehensive range of maritime, aviation, enterprise, and government solutions. Its core products include NexusWave, Fleet Xpress, and FleetBroadband. Inmarsat stands out in the market with its seamless global coverage, innovative technology like NexusWave, and a strong commitment to safety and sustainability. These unique selling points position Inmarsat as a leader in satellite communications.

Who Acquired Inmarsat?

Viasat is a global communications company known for its extensive range of satellite internet and communication services. It serves various sectors, including residential, business, aviation, energy, enterprise, government, and maritime. Key products include home and small business internet plans, in-flight connectivity for aviation, and managed communications for the energy sector. Viasat holds a significant market position, partnering with major organizations like NASA and the European Space Agency, and is committed to sustainability and equitable space use.

When Was Inmarsat Acquired?

Viasat completed its acquisition of Inmarsat on May 31, 2023. This strategic move occurred during a period of heightened demand for reliable satellite communications and significant industry consolidation. The timing aligns with Viasat's goals to enhance its global presence and capabilities, leveraging Inmarsat's established market position. The acquisition also reflects broader trends in the satellite industry, including increased competition and innovation driven by new entrants like SpaceX and Amazon.

Why Was Inmarsat Acquired?

Market Expansion: The acquisition of Inmarsat by Viasat significantly enhances the company's scale and scope, driving growth in the dynamic and competitive satellite communications industry. The combined assets will deliver connectivity and key safety services across maritime, aviation, government, and consumer markets.

Technology Integration: The integration of Viasat and Inmarsat's technologies is anticipated to increase the pace and scope of innovation in the global satellite connectivity sector. The combined company will leverage complementary assets, including 19 satellites spanning Ka-, L-, and S-bands, to offer new and improved capabilities to customers.

Competitive Advantage: The acquisition positions Viasat to offer a multi-layered network that provides the right connectivity at the right time, place, and price. The combination of people, technology, innovation, network assets, spectrum resources, and global partnerships is expected to help Viasat connect the world more affordably, securely, and reliably. The strategic move aims to make Viasat the undisputed leader in satellite communications, broadening the global fixed and mobile services available to customers.

Acquisition Terms

• Acquisition Price: $7.3 billion, including $551 million in cash and approximately 46.36 million shares of Viasat common stock.
• Payment Method: The transaction was completed using a combination of cash and stock. Specifically, $551 million in cash and approximately 46.36 million shares of Viasat common stock.
• Key Conditions or Agreements:
  • Inmarsat's shareholders received a special dividend of $299 million in April 2022, reducing the cash portion of the purchase price.
  • The shares issued to Inmarsat shareholders represent about 37.6% of Viasat's total shares on a fully diluted basis, with no single Inmarsat shareholder receiving shares representing 10% or more.
  • Viasat drew down approximately $1.35 billion of its committed financing package, including a $617 million secured term loan facility and a $733 million unsecured bridge loan.
  • Rajeev Suri and Andy Sukawaty from Inmarsat will join the Viasat Board of Directors.
  • The Baupost Group will no longer serve in a non-voting observer capacity to the Viasat Board of Directors.
  • The combined company will have its global international business headquarters in London and corporate headquarters in Carlsbad, California.
  • The European Commission, U.K. Competition & Markets Authority, and U.S. Federal Communications Commission approved the acquisition.

Impact on Inmarsat

The acquisition of Inmarsat by Viasat has led to significant changes in operations and management. Mark Dankberg continues to lead the combined company as Chairman and CEO, with Guru Gowrappan as President. Rajeev Suri, Inmarsat's CEO, and Andy Sukawaty, its Chairman, have joined Viasat's Board of Directors. The integration process initially focused on cost efficiencies, resulting in a 10% workforce reduction. However, the focus has now shifted towards growth and customer acquisition, with the new global international business headquarters established in London while maintaining corporate headquarters in Carlsbad, California.

The merger has also impacted Inmarsat's product offerings and services. The combined assets are expected to enhance innovation in the satellite connectivity sector, offering improved capabilities to customers. New services like NexusWave for maritime connectivity have been launched, combining Viasat's technology with Inmarsat's customer base. Despite some challenges, such as the ViaSat-3 satellite anomaly, the company is focusing on mobility markets and creating a collaborative ecosystem. Employee reactions have been mixed due to layoffs, but customer confidence, especially in maritime services, remains strong.

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