Gilat's Stellar Acquisition Boosts High-End Aviation Connectivity

Gilat Satellite Networks Strengthens Its Market Position

Gilat Satellite Networks Ltd. (NASDAQ: GILT), a top player in satellite networking technology, has completed its acquisition of Stellar Blu Solutions LLC. This strategic move marks a pivotal enhancement in Gilat's commitment to expanding its presence in the In-Flight Connectivity (IFC) sector. With the close of this acquisition, Gilat foresees substantial revenue growth, projecting an additional $120 to $150 million in annual revenues for 2025.

The Strategic Importance of Stellar Blu Solutions

Stellar Blu Solutions has carved out a niche as a leading provider of advanced SATCOM terminal solutions in the United States. With a robust order book, Stellar Blu is expected to significantly boost Gilat's revenue while contributing positively to its non-GAAP results in the upcoming fiscal year. The anticipated manufacturing capacity of Stellar Blu is set to exceed levels capable of generating an EBITDA margin above 10% in the near term.

Comments from Leadership

Adi Sfadia, CEO of Gilat, expressed enthusiasm over the acquisition, stating, "This acquisition is a crucial step in reinforcing Gilat's foothold in the burgeoning IFC market. The innovative technologies from Stellar Blu will synergize perfectly with our existing IFC solutions, propelling us to the forefront of commercial and business aviation, as well as adjacent high-end mobility sectors utilizing Electronically Steered Antenna (ESA) technology."

Enhancing Service Capabilities

With growing demand for high-quality in-flight Wi-Fi service, this acquisition empowers Gilat to meet customer expectations efficiently. Stellar Blu brings forth exceptional expertise in multi-orbit LEO and GEO IFC solutions. Mr. Sfadia additionally stated the expectation to roll out hundreds of Stellar Blu’s Sidewinder terminals in the forthcoming quarters.

Funding the Acquisition

The acquisition cost was set at $98 million, funded through a mix of cash and secured credit. Gilat had substantial net cash reserves at the year's end. To finance part of the acquisition, they utilized a secured $100 million credit line from HSBC Bank USA and Bank Hapoalim. This approach provides financial flexibility to capitalize on new market opportunities.

Future Financial Considerations

Initial consideration may rise to $147 million contingent upon Stellar Blu achieving set operational and strategic milestones over the next two years. This performance-based payment structure reflects Gilat's confidence in Stellar Blu's potential and the expected synergies post-acquisition.

About Stellar Blu Solutions

Stellar Blu is recognized for its state-of-the-art connectivity and network solutions, specifically tailored for future satellite networks. The company focuses on developing advanced aircraft communications technologies for leading airlines, alongside solutions for other mobility markets. Their offerings encompass turnkey in-flight connectivity solutions, which include terminal development, aircraft integration, and comprehensive certification and installation packages.

About Gilat Satellite Networks

Gilat Satellite Networks has been a leading supplier of satellite-based broadband communications for more than 35 years. The firm aims to deliver innovative solutions for various critical communication needs across commercial, military, and governmental sectors. Their offerings span from cloud-based platforms to high-performance satellite terminals, addressing diverse needs, including broadband access and critical infrastructure solutions.

Frequently Asked Questions

What is the significance of Gilat's acquisition of Stellar Blu Solutions?

The acquisition positions Gilat as a leader in aviation connectivity and is expected to substantially increase future revenues.

How much revenue is Gilat projecting from this acquisition?

Gilat anticipates additional annual revenues ranging from $120 million to $150 million in 2025.

What technologies does Stellar Blu Solutions specialize in?

Stellar Blu is known for its next-generation SATCOM terminal solutions and multi-orbit connectivity solutions.

How will the acquisition impact Gilat's market position?

The acquisition is expected to enhance Gilat's capabilities in the in-flight connectivity market, creating new growth opportunities.

Who should be contacted for more information about Gilat?

For more inquiries, contact Hagay Katz, Chief Products and Marketing Officer at Gilat, via email: Hagayk@gilat.com.

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