Israeli satellite transmissions group RR Media has bought local rival Satlink Communications for US$19m in its largest acquisition to date.
The deal gives RR Media added scale in the broadcast services sector, where it is understood to be talking to…
Israeli satellite transmissions group RR Media has bought local rival Satlink Communications for US$19m in its largest acquisition to date.
The deal gives RR Media added scale in the broadcast services sector, where it is understood to be talking to other potential acquisition targets as it seeks to double its business and become a global player.
It comes just over a month after the group snapped up Eastern Space Systems (ESS), a Romanian content management specialist, to build on its presence in Central Europe.
A well-placed source said RR Media is not just looking to make acquisitions in the satellite transmissions market, but is also in negotiations to branch out further into adjacent areas such as OTT.
Its acquisition of Satlink, which is majority owned by Israeli private holding company Eurocom, is subject to certain bank debt approvals.
Satlink had also been looking to grow through acquisitions and take part in the wave of consolidation that the satcoms sector has seen in recent years.
Its CEO David Hochner told SatelliteFinance in 2012 that it had shrugged off several approaches from prospective buyers so it could focus on its own growth ambitions.
Hochner is now set to join RR Media’s management team as he helps to facilitate a smooth transition.
RR Media CEO Avi Cohen said: “This acquisition, along with the recent acquisition of ESS and the previous acquisitions made in recent years, form essential elements of our strategy to increase the scale of the company expanding our global presence, growing our smart global distribution network and content management services, expanding our service offering, enhancing our mix of premium customers and leveraging world-wide industry expertise.”
Cohen expects RR Media will generate about US$25m in incremental revenue and US$5m in EBITDA in 2016 as a result of the deal.
The group expects to incur US$700,000 in transaction expenses and roughly US$1m in integration-related expenses.
It anticipates revenues to be between US$140m and US$148m for 2015, climbing to US$161m-171m a year later.
“In addition, we are updating our full year 2015 adjusted EBITDA guidance to be between US$17.6m and US$20.4m and expect that most of the synergy effects of this acquisition will show in 2016 with an increase of 25% to 30% in our EBITDA,” Cohen said.
“The newly acquired business is expected to provide further return on investment for RR Media, given Satlink Communications’ existing base of revenues. It is expected to improve margins, create a more efficient organisation by optimising network resources and operations over a larger customer base.”
Eurocom will remain a big player in Israel’s commercial space market after the deal through its ownership of satellite operator Spacecom, which it came close to selling to Spain’s Hispasat last year. The holding group is controlled indirectly by Shaul and Yosef Elovitch, and also owns Israeli telco and satellite broadcaster Bezeq.
