Global Eagle Entertainment Acquires Emerging Markets Communications

Gail Chiasson, North American Editor

Los Angeles-based Global Eagle Entertainment Inc. (GEE), worldwide provider of aircraft connectivity systems, operations solutions and media content to the travel and mobility markets, has agreed to acquire Emerging Markets Communications, a leading communications services provider to maritime and other mobility markets, in a transaction valued at $550 Million.

Our readers might remember that GEE is the company that bought RMG Networks’ Airline Media Network last year.

GEE’s new deal with Emerging Markets Communications creates a leading provider of satellite-based communications and media content to the rapidly growing mobility markets. The combined company expected to generate pro forma revenue of $660-690 million in 2016, and annual synergies are expected to reach $40 million

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. 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, 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,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.

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;
  • 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. 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.”

Avellan says, “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.

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.


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