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Viasat Shares Drop After Accord to Buy Inmarsat for $7.3 Billion

The deal includes $3.4 billion of U.K.-based Inmarsat's debt. Viasat will fork over $850 million of cash and 46.36 million shares.
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Viasat  (VSAT) - Get ViaSat, Inc. Report shares sank Monday, after the satellite communications company agreed to buy U.K. peer Inmarsat for $7.3 billion of cash and stock.

The transaction total includes $3.4 billion of Inmarsat debt. Carlsbad, Cal.-based Viasat will fork over $850 million of cash and 46.36 million shares of its stock.

That horde was valued at $3.11 billion at Friday’s $67, but was recently worth $2.76 billion, with Viasat closing at $55.65, down 17%.

Viasat shares are still up 14% over the past three months amid a boom in demand for telecommunications services. That compares to a 9% gain for the Russell 2000.

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“The complementary assets and resources of the new organization will enable the availability of advanced new services in mobile and fixed segments, driving greater customer choice in broadband communications and narrowband services (including the Internet of Things),” the companies said.

Their “advanced architecture will create a framework incorporating the most favorable characteristics of multi-band, multi-orbit satellites and terrestrial air-to-ground systems,” they said.

Those elements “can deliver higher speeds, more bandwidth, greater density of bandwidth at high demand locations like airport and shipping hubs and lower latency at lower cost than either company could provide alone.”

Further, “Operating and capital expenditure synergies are expected to drive value creation of $1.5 billion on an after-tax, net-present-value basis,” the companies said.

“In addition, both companies are nearing the end of unusually intensive capital investment cycles within the next 24 to 36 months and expect significant subsequent benefits from converging their respective architectures into a joint, high-performance global network.”