WASHINGTON — Satellite communications provider Speedcast is purchasing Globecomm for $135 million in cash and debt, further expanding the company’s presence in the defense market. Speedcast said the transaction, expected to close by year’s end, doubles its revenue from government customers and further consolidates the maritime communications market. Globecomm of Hauppauge, New York, is the 16th acquisition executed by Speedcast CEO Pierre-Jean Beylier since 2004, and follows last year’s purchase of UltiSat, which marked Speedcast’s entrance into government services. “This acquisition of Globecomm is fully in line with our strategy to consolidate our industry and thus build competitive advantages based on scale and capabilities,” Beylier said in an Aug. 28 statement. “Globecomm is particularly complementary to UltiSat as it strengthens Speedcast’s position serving Government customers at a time when government spending globally is expected to rise.” With capacity leases on more than 70 satellites, Speedcast bills itself as the “largest independent buyer of satellite capacity and service provider globally.” Speedcast said its size when combined with Globecomm will position the company to win larger, more complex defense contracts than before. Some 50 percent of Globecomm’s revenue comes from government services, with the rest split 25 percent maritime and 25 percent among various other communications service such as television broadcasting. More than 350 employees work for Globecomm across 10 countries including the U.S., China and South Africa. Thanks to UltiSat, Speedcast’s government revenue went from zero to 16 percent of sales in one year. With Globecomm, that figure grows to 22 percent, Speedcast said. Maritime would remain the largest chunk of Speedcast revenue, comprising 33 percent of revenue post-Globecomm acquisition from 35 percent today. Satellite links to oil and gas sites (25 percent) and businesses in emerging markets (24 percent) comprise the remainder of Speedcast revenue today. Speedcast significantly expanded its maritime footprint through its 2017 purchase of Harris CapRock for $425 million, and continued a trend among companies that provide satellite connectivity to ships. The past three years have seen four other major maritime acquisitions: Panasonic Avionics bought ITC Global, Global Eagle Entertainment bought EMC and Marlink bought Telemar and OmniAccess. “Horizontal consolidation in the maritime industry has been driven by the overcrowded market and the fallout from the oil downturn of several years ago, both of which have pressured industry revenue,” Louie DiPalma, an equity analyst at William Blair, wrote in an Aug. 28 research note. Such consolidation is “very synergistic” for maritime satellite service providers because of redundancies in network infrastructure and operating expenses, he wrote. Speedcast anticipates saving $15 million in annual operating costs within 18 months of closing the Globecomm acquisition. The Harris CapRock merger exceeded projected savings by $6 million, Speedcast said. Speedcast is financing the purchase by raising its borrowing amount from $425 million to $600 million on a credit facility that is not due until 2025. The company’s debt as of June 30 was $429.5 million, an increase of $42 million from 2017 due to the UltiSat purchase and debt refinancing costs. Having generated $305 million in revenue for the first half of 2018, Speedcast is now targeting $1 billion in annual revenue by mid-2021.
Satellite communications provider Speedcast has agreed to acquire Globecomm for $ 135 m , in a move that will boost the company ’s expansion into the defence market . The purchase will see Speedcast increase its revenue from government satellites , and follows the company ’s 2017 acquisition of UltiSat , which enabled it to enter the government satellite market .