TAMPA, Fla. — Private equity firm GI Partners plans to buy satellite operator Orbcomm, which specializes in connecting industrial monitoring devices, for about $1.1 billion including net debt.
The deal comes shortly after Orbcomm wrapped up two years of financial optimization efforts, following a series of its own acquisitions to expand in the industrial internet-connected device and machine-to-machine (M2M) communications market.
“The partnership with GI Partners will provide us the opportunity to rapidly advance our long-term strategy,” Orbcomm CEO Marc Eisenberg said.
“GI Partners has an established track record of working with companies to accelerate growth, and we look forward to continuing to drive innovation, providing world-class service to our global customers and expanding our market share in the industrial IoT as a privately held company.”
Orbcomm provides solutions that connect businesses to their assets, aiming to increase visibility and operational efficiency.
In October 2020, the New Jersey-headquartered company extended a strategic partnership with British satellite operator Inmarsat to develop Internet of Things (IoT), telematics and other devices through at least 2035.
About 25% of Orbcomm’s revenue is related to refrigerated goods, and the company has been busy building trailer products to increase the availability of components that support COVID-19 vaccine distributions.
The company reported $248.5 million in total revenues for 2020, down from $272 million in 2019 following disruption associated with the COVID-19 pandemic. Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, declined to $54.8 million for 2020, compared with $63.1 million for 2019.
Orbcomm stockholders will get $11.50 in cash per share under the deal with California-based GI Partners, which the operator said represents a premium of about 52% on its closing share price on April 7, the day before the announcement.
The companies expect to close the transaction in the second half of 2021, when Orbcomm will leave the Nasdaq stock exchange.
However, Orbcomm said it may seek an alternative buyer in a “go-shop” period that expires May 7, 2021.
GI Partners has raised more than $26 billion to invest in companies since 2001. The private equity firm focuses on data infrastructure businesses, primarily in the health care, IT infrastructure, services, and software sectors.
Orbcomm uses a constellation of very high frequency (UHF) OG2 satellites in low-Earth orbit (LEO) for its messaging services. The company also uses them to provide Automatic Identification System (AIS) services for navigation and maritime safety.
It uses Inmarsat’s L-band satellites in geostationary (GEO) orbit for low-data rate, two-way communications in remote locations.