Global Eagle Entertainment agrees to acquire Emerging Markets Communications

Communication, IT and Communications, Mergers and Acquisitions — By on May 10, 2016 at 8:28 PM

Transaction valued at $550 million creates a leading provider of satellite-based communications and media content to rapidly growing mobility markets

Combined company expected to generate pro forma revenue of $660-690 million in 2016 

Globe Newswire

9 May 2016 – Global Eagle Entertainment Inc. (NASDAQ: ENT) (“GEE”) today announced that it has signed a definitive agreement to acquire Emerging Markets Communications (“EMC”), a leading communications services provider to maritime and other mobility markets. 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. For additional details, please visit GEE’s transaction microsite at GEE-EMC.mobi.

Under the agreement, GEE will pay $550 million for EMC. EMC shareholders will receive $30 million in cash and 6.6 million shares of GEE stock at closing and another $25 million in 2017, which may be paid in cash or stock at GEE’s election. As a result of this transaction, ABRY Partners (“ABRY”), an experienced 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, Chief Executive Officer of GEE, will be CEO of the combined company and Abel Avellan, Founder and Chief Executive Officer of EMC, is expected to serve as GEE’s President and Chief Strategy Officer.

The combined company is expected to benefit from:

  • An expanded addressable market and growth opportunities;
  • Unparalleled global infrastructure to support customer needs;
  • A diversified and balanced revenue mix; and
  • Significant network and operational efficiencies.

“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.”

“We are excited to join forces with GEE to create a fast-growing and innovative provider of global mobility connectivity and content services, ” said Avellan. “When the transaction closes, GEE will have a broad, diversified revenue base consisting of more than 400 customers around the world. Our combined scale, product breadth, and superior technology will enable us to deliver solutions that are unparalleled in the market today. Whether by sea, air or land, the expectation for access to a superior Internet connection and engaging on-board content is constantly increasing and will continue to drive strong demand for our expanded portfolio of products and services.”

EMC is projected to reach $190-200 million in 2016 revenue and $55-65 million in Adjusted EBITDA in 2016. GEE projects annual synergies of at least $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 $15 million in 2017 and reach $40 million run-rate by 2019. Costs to achieve the synergies are expected to range from $4 to $5 million over the next 18-24 months.

Serving All Major Mobility Verticals

Founded in 2000, EMC is a leading provider of connectivity solutions globally on both land and sea, with 75% of its revenue derived from maritime-based activities. EMC serves more than 200 customers in over 140 countries and delivers connectivity and content services to all key maritime markets, including cruise lines and ferries, yachts, commercial shipping and energy. Its land-based markets primarily consist of providing mission critical connectivity services for remote offices and sites of non-government organizations (“NGOs”) and fully manage services for wireless operators and carriers in underserved regions around the world.

Following the acquisition of EMC, GEE’s global satellite-based connectivity platform will service more than 700 planes, 1, 600 vessels, 100, 000 cruise ship cabins, and several thousand land-based sites, creating a leading provider of connectivity and media content to better serve customers in rapidly growing mobility markets. Both companies have a well-established track record of driving growth through new customer acquisitions and very high contract renewal rates. In addition, GEE and EMC have jointly provided media content to the maritime market for a number of years.

Additional Details

The transaction is subject to customary regulatory approvals and closing conditions and is expected to close in the third quarter of 2016.

GEE was advised by Citi and the law firm of Winston & Strawn LLP. EMC and ABRY were advised by Macquarie Capital and the law firms of DLA Piper and Kirkland & Ellis.

Conference Call and Webcast

In conjunction with this release, GEE will host a webcast to discuss the transaction and its first quarter 2016 results on Monday, May 9, 2016 at 8:00 a.m. ET (5:00 a.m. PT). The webcast will be available on the investor relations portion of the Company’s Web site located at http://investors.geemedia.com/events.cfm . If you cannot listen to the webcast at its scheduled time, there will be a webcast replay archived on the Global Eagle website for 30 days.

About Global Eagle

Global Eagle Entertainment Inc. (NASDAQ: ENT) is a worldwide provider of aircraft connectivity systems, operations solutions and media content to the travel and mobility markets. Through the industry’s most comprehensive product and services platform, Global Eagle Entertainment provides airlines with a wide range of in-flight solutions. These include Wi-Fi, movies, television, music, interactive software, as well as portable IFE solutions, content management services, e-commerce solutions and original content development. Serving more than 200 airlines worldwide, Global Eagle Entertainment delivers exceptional quality and value to its customers to help them achieve their passenger experience objectives. The company’s headquarters are located in Los Angeles, California, with offices and teams located in North America, Asia, the Middle East, Europe, Africa, Oceania and South America. Find out more at: www.geemedia.com Find out more about the transaction at: www.GEE-EMC.mobi .

About EMC

EMC specializes in mission-critical communications and content for organizations and people on the move in the most remote locations. At sea, on land and in the air, the company provides seamless, reliable connectivity and access. EMC leverages its wholly-owned and operated satellite-terrestrial-cellular broadband network with fully meshed Multiprotocol Label Switching (MPLS) interconnected teleports. The company delivers mission-critical communications, Internet, live TV, on-demand video, voice, cellular and 3G/LTE services worldwide. EMC operates in 140 countries and runs 52 global field support centers. The established EMC team, in business for 35 years with unprecedented infrastructure and 20+ patented technologies, delivers industry firsts time and again. EMC hires and trains its own field engineers to flexibly deploy support quickly around the world. The company tailors its services for the most demanding users of mission-critical applications for the following sectors — energy; cruise and ferries; yachts; commercial shipping; mobile network operators; government; The United Nations (UN) and non-governmental organizations (NGOs); and global enterprises. For more information, visit www.EMCConnected.com.

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