There's no doubt ORBCOMM is a company on the move. Last month, it announced a 16,000 unit order to monitor one of the nation's largest retail fleets. Now it plans to buy Canada-based SkyWave for $130 million to build the largest global space-based M2M company.
Ottawa-based SkyWave is the largest M2M service provider on Inmarsat's L-band satellite network. SkyWave has more than 250,000 subscriber units, 400 channel partners, an estimated $60 million in yearly revenues and over $12 million in adjusted EBDITA.
To fund the acquisition, the company announced a stock offering of up to $72 million at a price of $5.60 per share. ORBCOMM said the offering isn't contingent upon the SkyWave acquisition and may use the net cash for future acquisitions and general corporate purchases.
ORBCOMM will get SkyWave on a cash free, debt free basis, putting up $122.5 million in cash and a $7.5 million promissory note to Inmarsat for a portion of its interest in SkyWave. The Inmarsat $7.5 million note is offset by a payment due from Inmarsat under a separate commercial agreement where it ends up with clear title to three ground stations in Canada, Netherlands, and New Zealand.
The merger will give ORBCOMM complementary products to its lower data-rate, low Earth Orbit satellite networks and a deeper relationship with Inmarsat and its network of geostationary satellites. It will give ORBCOM a new sales and marketing footprint in Eastern Europe and Asian markets.
Earlier this year, ORBCOMM and Inmarsat announced a M2M alliance, with ORBCOMM combining technologies able to use both the company's OG2 VHF satellite network and Inmarsat's L-band network. ORBCOMM also has relationships with Tier One cellular providers around the globe, so it can provide dual-mode service.
ORBCOMM is in the process of a $230 million satellite network expansion program . It has launched the first six next generation OG2 satellites and plans to launch the remaining 11 as early as the end of 2014 to complete the refresh. Its network of 25 first-generation OG1 satellites continue to provide global coverage as the OG2 network comes on line.
Earlier this year, I speculated that ORBCOMM would be a good place for Microsoft to invest. Microsoft wants to be a big IoT player, so it needs network partnerships and ecosystem development to get Windows 10 and its backend cloud servers more tightly wired into devices and existing M2M manufacturers.
ORBCOMM's acquisition of SkyWave only underlines its importance within the M2M world. It also will put pressure on Iridium, Globalstar and other M2M players to expand and further develop their relationships to have broader reaching and more tightly integrated ecosystems capable of offering both off-the-shelf turnkey services and more readily customizable solutions. Microsoft, Oracle, and other emerging Big Data/Big Analytics players will be key partners for M2M/IoT network providers.
Edited by
Maurice Nagle
