Globalstar has acquired satellite GPS asset-tracking and messaging specialist Axonn for up to US$18m.
Via its wholly-owned subsidiary SPOT, Globalstar will pay US$1.5m in cash, subject to a working capital adjustment, US$5.5m in Globalstar shares, and up…
Globalstar has acquired satellite GPS asset-tracking and messaging specialist Axonn for up to US$18m.
Via its wholly-owned subsidiary SPOT, Globalstar will pay US$1.5m in cash, subject to a working capital adjustment, US$5.5m in Globalstar shares, and up to an additional US$11m for earnout payments based on sales of existing and new products, payable over a five-year earnout period. Earnout payments will be made principally in stock but may be paid in cash after 13 million shares have been issued at Globalstar’s option.
To that end, Globalstar has already issued 6,298,058 shares of common voting stock to Axonn and certain of its lenders. The recipients are subject to a lock up period of one year. However, in an SEC filing Globalstar added that of the initial payment amounts, US$500,000 in cash and US$3.25m of stock have been placed in an escrow account and that “the cash escrow will be available for payment to Globalstar for certain product issues.”
Axonn has been central to Globalstar’s expansion of its SPOT Satellite GPS Messenger service, developing the SPOT’s portable GPS and satellite communications device. Axonn also designs and markets enterprise products that utilise Globalstar’s M2M Simplex data network. Both SPOT and Simplex have become increasingly important to Globalstar over the past two years as they have partially supplemented the fall in revenue of its traditional voice and data products due to the degradation in the satellite operator’s existing LEO constellation.
Commenting on the acquisition, Peter Dalton, chief executive officer of Globalstar, said: “This agreement is significant for it will effectively secure the critical long-term supply chain and associated intellectual property rights and technical design for the SPOT Satellite GPS Messenger retail consumer product as well as a number of Simplex data machine-to-machine (M2M) enterprise solutions. With the economics of this acquisition, we expect to increase our equipment margin for the SPOT Satellite GPS Messenger by approximately 100%.”
