Satellite communication services provider Globecomm Systems is actively looking to acquire a wireless apps company, according to the company’s chairman and CEO David Hershberg.
Speaking to SatelliteFinance, Hershberg said that Globecomm was looking at…
Satellite communication services provider Globecomm Systems is actively looking to acquire a wireless apps company, according to the company’s chairman and CEO David Hershberg.
Speaking to SatelliteFinance, Hershberg said that Globecomm was looking at fast growing companies in the US$15m-30m value range. “Right now we are looking at companies with application capability in the wireless business. We see this as a very important growth area. We have actually developed some of own apps but we are looking at some application companies for wireless, perhaps those that haven’t been able to get the critical mass yet,” Hershberg stated.
The move reflects Globecomm’s wider strategy over the past few years of making a number of bolt-on acquisitions to rapidly bolster its presence in new verticals. For example, a series of purchases between 2009 and 2011 saw Globecomm significantly expand its maritime offering.
Explaining the strategy, Hershberg said: “We took a look at the satellite industry in general and said what has a lot of stickiness? Well ships, you’re not going to put fibre on ships and we weren’t in ships. So we went and bought this company, Telaurus (for approximately US$6.5m June 2009), which was making a good buck and that deal was like a bolt-on. We then bought Mach6, which specialises in Ku-Band, and finally we got Evolution Communication, that was part of the C2C acquisition, and together that became our maritime business.
“We’re now trying to expand our cellular business and the acquisition of ComSource, which is one of the leaders in software for cellular operations, counting Verizon as one its customers, has significantly helped our capability.”
Hershberg added that he expects Globecomm’s maritime business to growth further. “We are about 6-8% of the maritime market right now are trying to get to 10%. What we are trying to do is innovate, differentiate ourselves. We are very close to a very large contract to provide broadband services to around 400 ships, we haven’t got it yet but we are hopeful.”
In order to help fund these acquisitions, Globecomm has a US$72.5m credit facility with Citibank which it tapped earlier this year for its US$41m acquisition of ComSource. However, Hershberg argued that in spite of the flexibility the facility gives Globecomm, he would prefer the company to be debt free.
“Citibank has been very good, lending to us at a good rate, 2.2%. It isn’t something that we need but if we want to get something that comes up, it’s nice to have it.
“What I’d like to do if the market would give us a bit better stock value, is to go out and sell some stock and pay the loan off. I don’t like debt, we never had debt before. We did it because the rate was good and we said ‘what the hell’,” Hershberg said.
Shortly after the ComSource acquisition was completed, speculation arose that Globecomm may itself be an acquisition target and had hired JP Morgan to advise it on any potential deal. While admitting the company had attracted unsolicited offers, Hershberg said that there was no active intention to sell the company.
He said: “What happened was that a couple of people came in and gave us some offers and ranges and I thought that as CEO in a public company we have an obligation to look at it, so we hired someone to look at it. There was no one out there trying to sell the company. That is not something we were or are trying to do.”
Indeed, at present Globecomm’s focus is on further expanding its presence in its existing verticals as well as developing new revenue channels such as wireless apps.
“We have five different verticals, and maybe that sounds like a lot for a company of our size, but they are all basically IP-type technology which we are very good at, we’ve got really good intellectual property there that we have developed over the years.
“What we are currently trying to do is develop a media cloud now where we can host media for companies and deliver it in different ways. Whether it is via internet, via satellite or via fibre, to deliver whatever the customer wants, where he wants it and doesn’t have to worry about it. We do that now on satellite but this is something I think is going to be important because if you have a company that is producing content, they don’t want to have to host it as well.
“We currently do this in a small way but we really want to do it in a big way so we are talking to a number of big companies that have a lot of video hardware about working with us to build a video cloud. It would be a joint venture similar to that which we currently have with two of the major cellular providers offering services on a revenue share basis.”
