Global satellite communications company Viasat Inc (VSAT:NASDAQ) yesterday announced it had "entered into a definitive agreement to sell its Link 16 Tactical Data Links (TDL) business to L3Harris Technologies (LHX:NYSE) for US$1.96 billion."
The firms indicated that the transaction is expected to close sometime during H1/23 but remains subject to ordinary closing conditions and receipt of required regulatory approvals.
Upon closing, Viasat estimates the Link 16 TDL sale to generate net proceeds of about US$1.8 billion after deducting various transaction fees, taxes, and expenses. Viasat noted that it has already secured approval for the Link 16 TDL sale from Inmarsat's equity sponsors.
Viasat Inc.'s CEO and Chairman Mark Dankberg commented, "This transaction will transform our balance sheet, reduce cash interest obligations, and sharpen strategic focus while enabling continued growth opportunities for the Link 16 business.
Link 16 is a data line network that allows the sharing of tactical pictures between ships, planes, and ground forces in near-real time. Viasat pointed out that its Link 16 TDL products and solutions business has been a key part of its Government Systems segment for more than 25 years.
The firm added that in addition to the Link 16 to space business, L3Harris will be acquiring all of Viasat's existing "Multifunctional Information Distribution System (MIDS) platforms and associated next-generation Link 16 terminals and handheld radios."
Viasat Inc.'s CEO and Chairman Mark Dankberg commented, "This transaction will transform our balance sheet, reduce cash interest obligations, and sharpen strategic focus while enabling continued growth opportunities for the Link 16 business and assuring our customers of a competitive, innovative and reliable source for their future needs . . . Looking ahead, the ViaSat-3 constellation and the Inmarsat acquisition both create greater forward-looking government systems growth opportunities in space-based businesses with more R&D, capital, and operational synergies."
L3Harris Technologies' CEO and Board Chair Christopher E. Kubasik remarked, "Acquiring Viasat's TDL product line will amplify our existing capabilities as a leading provider of resilient networking solutions . . . Global national security requirements are increasing rapidly in this sector, and now we will be able to advance JADC2 and broaden our multi-function, multi-domain mission solutions through integration with Link 16."
Viasat advised that its Link 16 TDL business accounts for around 35% of the total revenues from its Government Systems segment. The firm indicated that for the 12 months ended June 30, 2022, the 16 TDL businesses registered about US$400 million of revenue which served to deliver approximately US$125 million in adjusted EBITDA.
Viasat stated that it intends to utilize the proceeds from the Link 16 TDL sale to reduce debt and increase liquidity. In particular, the firm said it plans to use a sizable portion of the funds generated from the sale to reduce the combined leverage resulting from its Inmarsat acquisition.
The company mentioned that going forward, "its Government Systems segment will focus on three core areas: broadband and narrowband Satcom services, networking and technology; information assurance and cybersecurity; and an emerging portfolio of space-based services, including LEO to GEO relay and networks for a range of earth observation and sensor systems, alternate position, navigation and timing (PNT) and space situational awareness."
Viasat is a global communications firm based in Carlsbad, California. The company operates under the premise that everyone and everything worldwide can be connected affordably and safely while on the ground, in the air, or at sea via global communications networks. The company provides consumers, businesses, governments, and militaries around the world with the tools to power high-quality, fast, and secure satellite-based broadband services, internet access, and voice-over-internet protocol services.
L3Harris is a leading aerospace and defense technology firm headquartered in Melbourne, Flordia. It provides government and commercial customers in over 100 countries with advanced defense and commercial technologies for use on land, at sea, and in air and space. Yesterday, the company has a market cap of around Us$40 billion.
Viasat began yesterday with a market cap of around US$2.28 billion, with approximately 74.44 million shares outstanding and a short interest of about 7%. VSAT shares opened more than 17% higher yesterday at US$35.56 (+$5.33, +17.63%). The stock traded yesterday between US$35.01 and US$44.77 per share and closed for trading at US$38.37 (+$8.14, +26.93%).
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