Machine-to-machine focused satellite operator Orbcomm has announced the bolt-on acquisitions of two of its value added resellers GlobalTrak and MobileNet for an aggregate cash consideration of US$7.8m.
Orbcomm is to pay approximately US$2.75m for…
Machine-to-machine focused satellite operator Orbcomm has announced the bolt-on acquisitions of two of its value added resellers GlobalTrak and MobileNet for an aggregate cash consideration of US$7.8m.
Orbcomm is to pay approximately US$2.75m for GlobalTrak, while MobileNet will cost just over US$5m, of which US$3.5m will be paid in cash and US$1.5m in Orbcomm shares. The MobileNet deal also includes an earn-out based on the incremental service revenues.
GlobalTrak, a division of System Planning Corporation, is an information services company that utilizes satellite and cellular communications networks to provide real-time situational awareness and intelligence to predominantly governmental and military customers. Orbcomm said the acquisition would enable it to expand its distribution into the government sector and into new geographic regions, including the Middle East and Asia.
MobileNet specialised in satellite and cellular-based telematics solutions for monitoring heavy equipment and assets that support the rail industry. As with GlobalTrak the purchase was a vertical market acquisition by Orbcomm in order to expand its end-to-end solutions portfolio.
According to a research note by Raymond James’ senior analyst Chris Quilty, the acquisitions should provide significantly higher ARPUs, contribute run rate revenues of between US$5m and US$7m add more than 4,000 net subscribers. Orbcomm added that the acquisitions pose minimal channel conflict and should be immediately accretive.
To fund the purchases, Orbcomm will use some of the proceeds from the US$45m debt financing it completed in January 2013. That funding comprised a 9.5% 5-yr senior secured note agreement with AIG Asset Management.
Orbcomm announced the acquisitions as part of its full year 2012 results. The company reported a 39% rise in year-on-year revenues to US$64.5m and a 108% rise in adjusted EBITDA from US$8m in 2011 to US$16.6m in 2012.
Orbcomm was advised by Near Earth on the transactions.
