Nov 06, 2014
ORBCOMM Inc. has entered into a definitive
agreement to acquire SkyWave Mobile Communications (SkyWave),
the largest M2M service provider on the Inmarsat
global L-band satellite network, for $130 million.
Based in Ottawa, Canada, SkyWave has more than
250,000 subscriber units, 400 channel partners, an
estimated annualized $60 million in revenues and
over $12 million in Adjusted EBITDA.
“We expect the combination of SkyWave and ORBCOMM
to deliver significant value for both our
shareholders and customers,” said Marc Eisenberg,
ORBCOMM’s Chief Executive Officer. “By combining our
complementary products, distribution channels and
broad geographic footprints – with support from
Inmarsat – we are adding significant scale to our
business. Our customers will benefit from access to
one of the industry’s broadest set of complete
solutions, global regulatory authorizations and
satellite-based connectivity options. We also expect
this added scale to create sustainable long-term
shareholder value.”
“We are excited to enter the next phase of
collaboration with ORBCOMM,” said Rupert Pearce,
Inmarsat’s Chief Executive Officer. “Our two
companies are well positioned to exploit the growing
opportunity for satellite to enable the ‘Internet of
Things.’ ORBCOMM’s track record of innovation,
combined with Inmarsat’s global network reach, will
bring compelling offerings to the market, further
advancing Inmarsat’s M2M growth strategy.”
“ORBCOMM shares SkyWave’s commitment to customers
and passion for innovation, making it the perfect
partner for our customers and employees,” said
Pui-Ling Chan, SkyWave’s Chief Executive Officer.
“We are excited about the combination of our two
organizations, which will create a leading force in
the industry to provide more products, applications
and tool sets aimed at the ‘Internet of Things.’
Together, we have the capabilities to serve
customers of all sizes, locations or sectors with
one of the most comprehensive and competitive
portfolios, as we lead the M2M industry to a new
level.”
The acquisition of SkyWave furthers ORBCOMM’s
strategy to provide a complete set of capabilities
and options in the industry, while adding multiple
synergies to strengthen its M2M solutions portfolio.
With the addition of SkyWave, ORBCOMM will have one
of the largest combined engineering teams in the M2M
industry and will gain significant economies of
scale in operations and manufacturing. SkyWave’s
robust distribution channels in South America, Asia
and the Middle East, along with Inmarsat’s support,
provide ORBCOMM with even broader global
distribution. ORBCOMM will gain access to new
geographies in Eastern Europe and Asia and diverse
vertical markets such as security and marine. The
addition of SkyWave’s higher bandwidth, low-latency
satellite products and services that leverage the
IsatDataPro (IDP) technology also further expands
the breadth of ORBCOMM’s solutions portfolio.
ORBCOMM will acquire SkyWave on a cash-free
debt-free basis. Under the terms of the agreement,
SkyWave will be acquired for $130 million, $122.5
million of which is to be in cash provided by
ORBCOMM and $7.5 million in the form of a promissory
note to Inmarsat for a portion of its interest in
SkyWave, to be offset by a payment due from Inmarsat
under a separate commercial agreement. Under the
commercial agreement, ORBCOMM (through SkyWave) and
Inmarsat will jointly own the IDP technology, which
Inmarsat intends to make available through its
reseller channel, and Inmarsat will acquire and
operate SkyWave’s satellite network assets located
primarily at three Inmarsat earth stations in
Laurentides, Canada; Burum, Netherlands; and
Auckland, New Zealand for $7.5 million.
SkyWave and Inmarsat have previously entered into
a development agreement to create chipsets at lower
price points that will support the expansion of IDP
technology into multiple new vertical markets.
ORBCOMM expects to make SkyWave’s products
available through SkyWave’s current channel,
ORBCOMM’s distribution channel and Inmarsat’s
network of distributors.
The acquisition, which has been unanimously
approved by the boards of directors of both
companies, is expected to close in early 2015,
subject to receipt of required regulatory approvals.
Raymond James served as financial advisor to
ORBCOMM on this transaction, McCarthy Tétrault
served as Canadian legal counsel, and Milbank,
Tweed, and Hadley & McCloy served as U.S. legal
counsel to ORBCOMM. For additional information on
this transaction, please refer to ORBCOMM’s SEC
filing on Form 8-K being filed today.
