VIASAT TO BUY COMMUNICATIONS COMPANY RIGNET IN $222 MILLION DEAL

Move will help Carlsbad-based firm expand satellite Internet to hard-to-reach industries

To help jump-start efforts to bring satellite Internet to more hard-to-reach businesses, Carlsbad-based Viasat said Monday that it has agreed to buy energy communications firm RigNet in an all-stock deal valued at $222 million, including the assumption of debt.

Viasat entered into the agreement ahead of the launch of three new satellites starting late next year. These Viasat-3 satellites, each with a terabyte of capacity, will give the company global coverage and a massive boost in bandwidth, allowing it to deliver faster speeds and more data to customers.

That additional capacity and geographic reach has Viasat looking for new areas of expansion beyond its core residential Internet customers in the Americas and commercial airlines, where it powers in-f light Wi-Fi for

JetBlue, American and United Airlines, among others.

Publicly traded RigNet has 1,190 managed communications network sites in 40 countries — with many of the networks on offshore energy rigs.

“This gives us a new vertical industry at scale in a bandwidth-intensive area, which is where we think our streng th is,” said Viasat Chief Executive Rick Baldridge. “The expertise of the combined companies puts us in a better position for expansion into other ad

jacent industries in remote enterprise applications, such as mining, shipping and maritime, which by their nature are really diff icult to ser ve, par ticularly with the type of high bandwidth services that we think are going to be in high demand.”

The acquisition must be approved by RigNet shareholders. Viasat has reached an agreement with stockholders owning 25 percent of RigNet’s shares to support the transaction. It is expected to close by the middle of next year.

Under the agreement, RigNet stockholders will receive 0.1845 shares of Viasat stock for each of their

shares, which represents an 18 percent premium over RigNet’s trading price and values the equity at $130 million. Viasat also will assume $92 million in RigNet debt.

About two-thirds of Houston-based RigNet’s revenue comes from managed communications services, where it designs and operates “voice and data networks for customers who are operating in some of the harshest environments imaginable and in some of the most complex edges of the world, from the outback of Australia to the deep-water f ields in offshore Brazil,” said Steven Pickett, chief executive of

RigNet, in a conference call with analysts.

The company also provides a suite of machine learning, ar tif icial intelligence, and cybersecurity tools, as well as an industrial Internet of Things portfolio.

It has more than 600 employees, with half based overseas in countries where Viasat is expanding its satellite coverage.

RigNet’s revenue is down this year because of decreased demand for oil and gas due to the COVID-19 pandemic. Through the first nine months, sales dipped 10 percent to $161 million. The company lost $37 million through Sept. 30, compared with a $19 million loss for the same period a year earlier.

Still, Viasat, with more than $2 billion in revenue, believes the transaction will increase its cash f low and give it access to RigNet customers. It also establishes a platform to expand beyond oil and gas and into other enterprise markets, said Baldridge.

The deal was announced before markets opened. Viasat’s shares ended trading down 2.7 percent at $30.57. RigNet’s shares dipped 3 percent to $5.53. Both trade on the Nasdaq exchange.