Inmarsat’s $7.3bn (£6.6bn) acquisition by US-based Viasat has been approved by the UK government under its recently introduced new security law.
Jacob Rees-Mogg, the UK’s secretary of state for business, energy and industrial strategy (BEIS), found that the transaction does “not pose a risk to the UK’s national security”.
“The UK government’s clearance of Viasat’s proposed acquisition of Inmarsat under the National Security and Investment Act is another important step forward on the road to closing the deal,” Viasat chief executive Mark Dankberg said.
“Viasat has been a trusted partner of the UK’s defence and national security communities for more than a decade, including in the provision of its market-leading encryption products.
“The combined company ... will build upon the strong UK relationships that Viasat and Inmarsat already enjoy and allow us to deepen our contribution to the UK’s National Space Strategy.”
Inmarsat chief executive Rajeev Suri said the approval brings the company “closer to delivering the new jobs and investment to the UK that have been committed by both Inmarsat and Viasat”.
“Together, we will be well-positioned to compete in a robust market that has both well-funded new entrants and other industry players in the process of consolidating,” he said.
In March 2022, the companies committed to economic undertakings with BEIS, which underlined their pledge to strengthen and advance the UK’s National Space Strategy.
The economic undertakings include an “expansion in the number of highly skilled jobs in key areas” and a “30% increase in overall research and development spending in the UK”.
Under the deal, California-based Viasat will buy Inmarsat for $850m in cash and $3.1bn in stock, and will assume $3.4bn in debt.
The merged entity would control a fleet of 19 satellites, with 10 more under construction for launch in the next three years.
The transaction is seen by the market as an attempt to counter rising competition from firms including Elon Musk’s Starlink and OneWeb.
In late June, shareholders of Viasat voted in favour of the takeover of Inmarsat in a move described by then Viasat chief executive Richard Baldridge as an important milestone in completing the acquisition.
Buying Inmarsat will also help Viasat diversify its revenues away from heavy reliance on the US.
Late in 2021, it was reported that Inmarsat’s private equity owners were considering a sale of the company they bought for $3.4bn in 2019.
Apax Partners and Warburg Pincus bought the company in partnership with the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan Board.
Inmarsat was set up in the 1970s as a United Nations-linked marine safety vehicle and listed in London in 2005 when digital communications took off as a money-spinner.