PRAGUE – Aeronautical content and satellite-connectivity provider Global Eagle Entertainment (GEE) on May 9 said it would purchase maritime satellite services provider EMC for $550 million in the latest consolidation in the mobile satellite business.

GEE Chief Executive Dave Davis said the combined company would be able to generate at least $40 million in annual synergies from 2019 as it trims its satellite bandwidth requirements to eliminate unneeded overlap and performs other cost-cutting measures.

The enlarged GEE will have a portfolio of customers about evenly divided between airline and maritime customers, and one whose revenue is derived about 50 percent from connectivity – providing bandwidth to customers – and 50 percent from providing audio and video programming, a GEE specialty.

The new company’s expected 2016 revenue of around $675 million — $480 million from GEE and $195 million from the former EMC – likely would be 33 percent from aviation 33 percent from the cruise and yacht markets, 22 percent from nongovernmental organizations and 12 percent from commercial shipping and energy production, the company said in a May 9 conference call.

The transaction obeys the same logic that drove Panasonic Avionics’ purchase in 2015 of ITC Global: Commercial air routes often resemble shipping lanes, and the same satellite that beams broadband to an aircraft can provide the same service to maritime customers further below.

Abel Avellan, EMC’s chief executive and founder, said the Miami-based company is growing at 15 percent annually and has almost no exposure to the oil and gas connectivity business, which has slumped with the drop in crude-oil prices. Avellan will become GEE’s president and chief strategy officer.

EMC has focused on cruise ships and yachts. Its addressable market includes 150,000 cruise-line cabins, more than 7,500 yachts of various sizes and 130,000 merchant vessels.

Miami-based MC owns 21 teleports worldwide and has a patented digital compression and bandwidth-optimization technology that the company says maximizes the number of bits it can squeeze from a hertz of bandwidth.

Airline connectivity providers have been scooping up satellite bandwidth, in both Ku- and Ka-band, to assemble global networks that appeal to airlines that, in the past year or two, appear to have concluded that they need to provide broadband to their passengers and crews.

The post-acquisition GEE will now be able to reduce, by an undisclosed amount, the satellite that GEE and EMC separately would have purchased, and to negotiate better terms for future bandwidth leases, Davis said in a May 9 conference call.

“One of the most compelling things about this transaction – and I can’t emphasize this enough – is the synergy created,” Davis said. “We have overlapping areas of coverage, which aren’t needed. We have different contracts which we believe we can combine and save significantly on the combined company’s spend on satellite bandwidth.

“When you combine our two networks, we have total global coverage in the Ku-band and we also have some Ka-band coverage, as well as global C-band through the EMC network,” he said.

Network operating centers will be consolidated as well, with GEE using EMC-owned teleports for aviation customers.

EMC also has Ka-band capacity in the Middle East. Avellan said the combined company, like EMC, will have no preference for one bandwidth over another even if most of its current maritime business is in Ku-band. GEE has leased Ka-band capacity over North America aboard EchoStar’s Hughes Network Systems’ Jupiter-2/EchoStar 19 satellite, to be launched later this year.

GEE is purchasing EMC from Boston-based Abry Partners, which will have a right to a seat on GEE’s board of directors. The $550 million purchase price includes $25 million in deferred compensation to be paid, at GEE’s discretion, in cash or stock within one year.

Davis said the purchase price is 5.5 times EMC’s expected EBITDA, or earnings before interest, taxes, depreciation and amortization, after adjusting for the full $40 million in synergies to accrue to the company by 2019. EMC said it expects to report about $60 million in adjusted EBITDA for 2016, given the transaction a value of 9.2 times EBITDA.

For the three months ending March 31, GEE reported revenue of $83.6 million, up 17 percent from the same period a year ago, with half the growth coming from GEE acquisitions made in 2015. Adjusted EBITDA was $10.3 million, up 26 percent from a year ago.

Davis said GEE expects no change to its relationship with Southwest Airlines, a long-standing customer that is fitting some of its planes with GEE connectivity hardware but has also indicated it would survey the current aeronautical broadband market to determine what is available.

Peter B. de Selding was the Paris bureau chief for SpaceNews.