Aerospace giant EADS has acquired satellite communications services provider Vizada from private equity firm Apax France for approximately US$960m. EADS stated that on completion, Vizada will become a subsidiary of Astrium Services.
SatelliteFinance…
Aerospace giant EADS has acquired satellite communications services provider Vizada from private equity firm Apax France for approximately US$960m. EADS stated that on completion, Vizada will become a subsidiary of Astrium Services.
SatelliteFinance understands that Apax hired UBS to undertake a sales process earlier this year with a number of strategic players having expressed their interest but all ultimately trumped by EADS’ greater spending power.
The purchase price was just over 10 times Vizada’s 2011 EBITDA (US$95m), which is comparable to the multiples that Harris paid for both CapRock (9.5x) and Schlumberger GCS (9.9x). However, it is more than the 7x annual EBITDA that Inmarsat paid for Vizada’s main rival Stratos back in 2009.
The transaction represents a lucrative exit for Apax France, which formed Vizada in 2007 through the combination of France Telecom Mobile Satellite Communications (FTMSC) and Telenor Satellite Services (TSS).
Apax France initially snapped up FTMSC from France Telecom for approximately US$76m in October 2006 and then followed this with the US$400m of TSS in September 2007. The merged entity subsequently had a 38.1% share of the Inmarsat LESO (land earth station operators) market, second only behind Statos’ 46.8% share.
Commenting on the sale, Bertrand Pivin, partner at Apax Partners, said: “It has been a stimulating journey since the carve out of FTMSC. Vizada’s management effectiveness and employees’ skills, as well as capital, sector knowledge and resources deployed by Apax Partners, led to a 3-fold increase in revenues and a 7-fold increase in EBITDA. This striking growth results from a combination of organic growth, transforming build ups and continuous operational improvements in an attractive sector undergoing major technology shifts. It is representative of Apax Partners France’s investment strategy.”
The sale is Apax France’s third successful exit from the telecommunications sector in 2011, having sold French telecom operators Prosodie and Outremer Telecom for US$551m and US$188.3m respectively earlier this year.
As for EADS, the acquisition is part of its intention to bolster its non-Airbus businesses through bolt-on acquisitions in order to better balance its revenues. Under its Vision 2020 strategy, EADS aims to generate turnover of approximately E20bn by 2020 and reach a 50/50 balance in Airbus / other Divisions’ revenues. To achieve this, EADS is seeking in particular to increase the share of its services business from 10% to 25%.
And EADS has a hefty war chest to carry out this plan. The company has more than US$15.5bn in available cash and in the past two months has spent over US$1bn on Canadian aircraft maintenance company Vector Aerospace and Danish aircraft parts distributor Satair and has signed an agreement to purchase US-based Air Traffic Management services specialist Metron Aviation. EADS stated that it financed the purchase of Vizada through existing cash balances.
EADS chief strategy and marketing officer Marwan Lahoud said: “Further to the recent acquisitions of Vector Aerospace in Canada and Metron in the US, as well as the on-going public offering for Satair in Denmark, this acquisition marks a further step towards the realisation of EADS’ strategy to balance platforms with services, develop business in North America and diversify its workforce. This is a significant milestone in making Vision 2020 a reality. This is clearly an accretive transaction for EADS shareholders and will generate significant synergies.”
Alongside the significant amount of Inmarsat L-band business that Vizada will give Astrium Services, EADS said that the transaction will also considerably increase Astrium’s maritime business.
Eric Béranger, CEO of Astrium Services said: “Vizada being a world leader in commercial satcom services is the perfect complement to our existing satellite communications portfolio which is heavily focused on governmental and secure civil satcom. Bringing Vizada together with Astrium will enable us to be more innovative, diversifying our range of services and providing our customers with greater flexibility.”
Following regulatory approval, Vizada, which expects to generate around US$660m in revenue and US$95m EBITDA in 2011, will become a fourth business line within Astrium Services.
UBS advised Apax France on the sale with Weil, Gotshal & Manges and Hogan Lovalls providing legal advice. EADS was advised by Messier Maris et Associes, while Freshfields Bruckhaus Deringer was its legal adviser.
