ORBCOMM Acquires SkyWave Mobile Communications
Rochelle Park, NJ, November 7, 2014 ORBCOMM Inc. (Nasdaq: ORBC), a leading global provider of Machine-to-Machine (M2M) solutions, today announced that it has entered into a definitive agreement to acquire SkyWave Mobile Communications (SkyWave), the largest M2M service provider on the Inmarsat (LSE: ISAT.L) global L-band satellite network, for US$ 130 million. Based in Ottawa, Canada, SkyWave has more than 250,000 subscriber units, 400 channel partners, an estimated annualized US$ 60 million in revenues and over US$ 12 million in Adjusted EBITDA.
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 IsatData Pro (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 US$ 130 million, US$ 122.5 million of which is to be in cash provided by ORBCOMM and US$ 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 US$ 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.
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