Viasat, Inc. (NASDAQ: VSAT) is engaged as a global communications company, which is focused on developing a high-powered network to allow for fast and affordable connections on the ground, air or sea. Shares of the communications company are rallying 29% through early trading on Monday, October 3, 2022. Over the past three months, Viasat has seen average daily volume of 399,280 shares. However, volume of 4.65 million shares or dollar volume of around $180.19 million, has already exchanged hands through early trading.
Shares of Viasat are gaining after the company announced it has entered into a definitive agreement with L3Harris Technologies to sell its Link 16 Tactical Data Links (TDL) business for $1.96 billion. Viasat estimates the net proceeds from the sale with come in at $1.8 billion after taxes, fees and other expenses. For the twelve-month period ended June 30, 2022, the Link 16 TDL business generated revenues of $400 million and an estimated adjusted EBITDA of $125 million.
The TDL business represented 35% of Viasat’s Government Systems business, which has become a leader in the Link 16 TDL space over the years. The asset sale also includes the Multifunctional Information Distribution System (MIDS) platform, as well as associated next-gen Link 16 terminals, radios and more.
Viasat says it intends to utilize the proceeds of the asset sale to help reduce net leverage and increase liquidity. On a pro forma basis for the Link 16 TDL sale, standalone net leverage would have decreased from 4.2x to 1.4x LTM adjusted EBITDA, as of June 30, 2022. The proceeds will also be utilized to help integrate and expand its recent acquisition of Inmarsat. Overall, the asset sale is estimated to close sometime during the first half of 2023.
“This transaction will transform our balance sheet, reduce cash interest obligations, and sharpen strategic focus while enabling continued growth opportunities for the Link 16 business and assuring our customers of a competitive, innovative and reliable source for their future needs. The Link 16 Tactical Data Links business has been an important contributor to Viasat’s growth and earnings and the transaction recognizes the value created by our outstanding team. L3Harris has been a long-time Link 16 strategic partner and has a portfolio that will benefit significantly from these capabilities. Looking ahead, the ViaSat-3 constellation and the Inmarsat acquisition both create greater forward-looking government systems growth opportunities in space-based businesses with more R&D, capital and operational synergies,” said Mark Dankberg, CEO and Chairman of the Board, Viasat.
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