US M2M-focused MSS operator Orbcomm has continued its strategy of making acquisitions down the value chain by snapping up Skygistics, a distributor of satellite M2M systems in 23 different countries across Africa. Skygistics is just the latest acquisition Orbcomm has made in order to rapidly gain scale and move into new verticals.
US M2M-focused MSS operator Orbcomm (NASDAQ:ORBC) has continued its strategy of making acquisitions down the value chain by snapping up Skygistics, a distributor of satellite M2M systems in 23 different countries across Africa.
SatelliteFinance understands that Orbcomm will pay R59.5m (US$4.04m) for Johannesburg-based Skygistics and finance the deal with cash on hand. Skygistics is mostly backed by venture capital and has annual revenues of R60m (US$4.08m).
Skygistics has been a long-time partner of Orbcomm’s Canadian M2M service provider SkyWave, another bolt-on purchased for US$130m in 2014, selling on its satellite connectivity solutions.
Orbcomm’s CEO Marc Eisenberg (pictured) said the takeover of Skygistics, which it was advised on by Near Earth, was part of his company’s long-term strategy of becoming a leading global, full-service IoT provider.
“Adding incremental products and services to Skygistics’ infrastructure will build a stronger presence on the African continent, which is an important growing market,” Eisenberg added.
Skygistics is the eighth acquisition Orbcomm has made since March 2013 as it has looked to rapidly gain scale and move into new verticals.
The target’s chairman Kevin Eborall said the strength of the Orbcomm brand matched with Skygistics’ regional footprint and technology made the transaction a great fit.
Eborall, a major Skygistics shareholder, said Orbcomm provided Skygistics with the products, solutions, support and technology to make a greater impact in the underserved African telematics market, and expected to be able to “vastly” grow the business and meet more of its customers’ needs.
At present Skygistics has 40 employees and serves around 250 telematics and enterprise customers, with its services centred on the management of remote and mobile assets.
Orbcomm hopes to close the transaction in May, which will also see it take ownership of Skygistics’ South African and Australian subsidiaries.
Since the SkyWave transaction 18 months ago, Orbcomm has bought WAM Technologies, which provides remote wireless management for shipping containers, last October, and sensor software firm InSync for US$11m in January 2015.
Those deals were much smaller than the takeover of SkyWave, which was the biggest M2M service provider on Inmarsat’s L-band network at the time of the US$130m buyout with more than 250,000 subscriber units. A month prior to that Orbcomm sealed a US$160m loan from Macquarie that featured a series of acquisition term loan facilities worth up to US$80m.
It has been looking down the value chain for M&A targets for a number of years. In March 2014 Orbcomm swallowed up Dutch transportation temperature monitoring firm Euroscan for US$29m, in October 2013 it snapped up the asset tracking operations of communications developer Comtech, and its acquisition spree began in March 2013 when it spent US$7.8m on value-added resellers GlobalTrak and MobileNet.
Rochelle Park, New Jersey-based Orbcomm released its full year 2015 results in March, saying its financial performance had been boosted by its recent acquisitions of SkyWave, InSync and WAM Technologies.
Total revenues for the year were up 85% over the previous year reaching US$178m, adjusted EBITDA rose 139% to US$42.3m, and EBITDA increased 108% to US$19.4m, according to a company statement.
Orbcomm’s expansion plans have also been boosted by the news that its final 11 OG2 satellites entered commercial service in Q1. The launch of its second-generation fleet was delayed as its launch services provider SpaceX had to push back its manifest after a failure last June saw Falcon 9 grounded for almost six months. SpaceX successfully placed Orbcomm’s payload in late December, a launch which also saw SpaceX successfully land the first stage of Falcon 9 after completing a mission.
The satellites completed the 17-strong OG2 constellation, designed to enhance its M2M network. The operator says it is now collecting more than 18 million AIS messages from roughly 150,000 unique vessels every day.