Communications provider RigNet has announced a $25 million takeover of energy broadband assets owned by satellite operator Inmarsat, including an M2M network that serves the US pipeline industry.
Under the deal, RigNet (Houston, TX, USA) – which specializes in providing managed communications services to the oil and gas industry – will also become a distribution partner of Global Xpress, Inmarsat’s (London, UK) high-throughput satellite communications network.
RigNet says the assets it is acquiring represent “a natural and strategic fit” with its existing business, and include microwave and WiMax networks in the US Gulf of Mexico; VSAT interests in Russia, the UK, US and Canada, including the M2M business; a telecoms system integration business that operates worldwide; and a global L-band mobile satellite services retail energy business.
The deal includes the employees, contracts and working capital of the assets RigNet is acquiring.
As a Global Xpress distributor, RigNet will be able to offer next-generation satellite services to existing and new customers in the energy sector.
The company has agreed to purchase a “significant” amount of capacity on the Global Xpress network during the four years after it becomes operational.
RigNet says it expects to use Global Xpress and L-band services across its own business as well as that of the acquired divisions.
“With the purchase of Inmarsat’s energy broadband business and the addition of Global Xpress and L-band to our transport options, we will broaden and deepen our capabilities to serve the oil and gas industry across the life of the field from drilling through production,” said Mark Slaughter, RigNet’s chief executive.
Slaughter also said that a major objective would be to raise business growth rates and margins to levels “closer to those we see in RigNet’s existing operations today”.
Inmarsat’s energy broadband business reported revenues of about $81 million in 2012 and RigNet says it expects the acquired business to achieve an EBITDA contribution margin of between 8% and 10%, on a run-rate basis, within the first year of closing.
It expects to incur integration expenses of between $5 million and $6 million in 2014 and to make additional capital investments of $5 million in network upgrade projects currently under way.
RigNet and Inmarsat expect to close the deal in the first quarter of 2014, subject to regulatory approvals.