Above: GEE will benefit from EMC’s worldwide Ku-band network
May 12, 2016 – Global Eagle Entertainment (GEE) has announced that it has signed a definitive agreement to acquire Emerging Markets Communications (EMC), a communications services provider to maritime and other mobility markets. According to GEE, the combined company will become a leading provider of global satellite-based communications and media content serving the rapidly growing aviation and maritime markets and select land-based markets. The transaction is subject to customary regulatory approvals and closing conditions and is expected to close in the third quarter of 2016.
Under the agreement, GEE will pay US$550 million for EMC. EMC shareholders will receive US$30 million in cash and 6.6 million shares of GEE stock at closing, and another US$25 million in 2017, which may be paid in cash or stock at GEE’s election. As a result of this transaction, ABRY Partners, a communications-focused private equity investment firm and the majority owner of EMC, will acquire an equity position in GEE as well as the right to nominate a member to GEE’s board of directors.
Dave Davis, CEO of GEE, will be CEO of the combined company and Abel Avellan, founder and CEO of EMC, is expected to serve as GEE’s president and chief strategy officer.
“This is a transformative acquisition for GEE that significantly expands our addressable market and accelerates our growth opportunities,” said Davis. “EMC’s verticals collectively represent a multi-billion dollar market opportunity with most growing at an annual rate of approximately 15%. Moving into a highly complementary, adjacent market like maritime leverages our existing infrastructure and suppliers to achieve improved efficiencies and cost savings, and provides valuable cross-selling opportunities for our content, digital media and operations solutions products. We believe the synergies available through this combination position us well to grow market share, expand our margins, and improve our returns in the years ahead.”
EMC is projected to reach US$190-200 million in 2016 revenue and US$55-65 million in Adjusted EBITDA in 2016. GEE projects annual synergies of at least US$40 million, resulting from removing overlap in existing network infrastructure, reduced bandwidth costs, lower development expenses and integrating internal operations. GEE expects to achieve annual synergies of approximately US$15 million in 2017 and reach US$40 million run-rate by 2019. Costs to achieve the synergies are expected to range from US$4 to US$5 million over the next 18-24 months.
EMC’s mobility verticals
Following the acquisition of EMC, GEE’s global satellite-based connectivity platform will service more than 700 aircraft, 1,600 vessels, 100,000 cruise ship cabins, and several thousand land-based sites, creating a provider of connectivity and media content to better serve customers in rapidly growing mobility markets.