ORBCOMM to Acquire SkyWave Mobile Communications

November 7, 2014

ORBCOMM Inc. has entered into a definitive agreement to acquire SkyWave Mobile Communications 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 CEO. “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 CEO. “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.”

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 $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 adviser 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.