Speedcast agrees to buy satellite market competitor Globecomm to double global government sales and position for U.S. defense budget growth.
Satellite communications provider Speedcast has agreed to acquire one of its competitors Globecomm for $135 million in a deal that doubles projected sales in the global government market and seeks a greater share of the growing U.S. defense budget.
Speedcast expects to close the transaction by the end of the year and sees the move as complementing last year’s acquisition of UltiSat to enter the worldwide public sector market including the U.S.
That addition of Ultisat pushed Australia-based Speedcast’s government sales from near-zero to 16 percent of total corporate revenue. Speedcast cited stabilizing government and military satellite markets as rationale behind its acquisition of Gaithersburg, Maryland-based Ultisat.
Speedcast now sees nearly 22 percent of pro forma revenue coming from the government market with Globecomm in tow and better positioning to win larger and more complex contracts, according to an investor presentation on the deal.
“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,” Speedcast CEO Pierre-Jean Beylier said in a statement.
Globecomm provides remote communications, multi-network infrastructure and managed network services to government, maritime and other enterprise customers in over 100 countries. The Hauppauge, New York-based company’s revenue in calendar year 2017 was split roughly in half between government and commercial contracts.:
Key U.S. government contract vehicles in Globecomm’s portfolio include two large Army programs: the $10 billion Global Tactical Advanced Communications Systems Contract awarded in 2012 to 26 total companies, and the $4 billion Communications and Transmissions Systems contract also awarded in 2012 to 12 total companies.
Globecomm is also on the General Services Administration’s $2.5 billion Custom SATCOM Solutions contract awarded last year to 22 total companies. UltiSat holds a place on the CS3 contract’s small business track.
J.P. Morgan and Jefferies were financial advisers to Speedcast. Goodwin was legal adviser to Speedcast. Kirkland and Ellis was legal adviser to Globecomm.