Viasat to Acquire U.K.-Based Inmarsat for $7.3B

Global communications firm Viasat, Inc. (VSAT) has signed an agreement to acquire a U.K.-based rival, Inmarsat, in a deal valued at $7.3 billion. Inmarsat provides mobile satellite communications services across the world.

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California-based Viasat provides high-speed satellite broadband services and secure networking systems to the military and commercial markets.

Shares of Viasat closed nearly 17% down on Monday, even though the company reported better-than-expected financial results for the fiscal second quarter ended September 30. The stock, however, gained 0.6% in the extended trading session to end the day at $56.

Transaction Details

Under the terms of the deal, Viasat will pay $850 million cash and issue nearly 46.36 million new common shares valued at $3.1 billion to Inmarsat’s shareholders. Viasat will also assume $3.4 billion of Inmarsat’s net debt. (See Insiders’ Hot Stocks on TipRanks)

The transaction is likely to close in the second half of the calendar year 2022, following which the combined company is expected to witness revenue and adjusted EBITDA growth in the mid-teens percentage.

Management Comments

The Executive Chairman of Viasat, Mark Dankberg, said, “Inmarsat’s dual-band global mobile network, unique L-band resources, skills and capabilities in the U.K. 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.”

The CEO of Inmarsat, Rajeev Suri, said, “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.”

Combined Offerings

Following the completion of the acquisition, the combined company will offer a greater choice to customers in broadband communications and narrowband services, including IoT.

It will also offer a fleet of 19 in-service satellites, 10 under construction spacecraft and spectrum licenses across the S-, L- and Ka-bands.

Wall Street’s Take

After the release of the second-quarter results and the announcement of Inmarsat’s acquisition, Raymond James (RJF) analyst Ric Prentiss reiterated a Buy rating on the stock but lowered the price target from $70 to $62 (16.2% upside potential).

Analyst Recommendation

Overall, the stock has a Moderate Buy consensus rating based on 3 Buys and 2 Holds. The average Viasat price target of $71 implies 33.1% upside potential. Shares have gained 74.3% year-to-date.

Investor Opinion

TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on Viasat, with 17.1% of investors on TipRanks decreasing their exposure to the stock over the past 30 days.