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Gilat Satellite Networks Ltd. GILT has closed the deal to acquire Stellar Blu Solutions LLC (“Stellar Blu”), a U.S.-based provider of advanced SATCOM terminal solutions and satellite connectivity. The company announced the acquisition in June 2024.
This move is set to bolster Gilat’s position in the growing In-Flight Connectivity (IFC) market and enhance its commercial and business aviation space. Additionally, the acquisition is expected to drive growth in adjacent high-end mobility sectors, particularly those well-suited for Electronically Steered Antenna (ESA) applications.
What Does This Acquisition Offer?
With Stellar Blu’s strong backlog, Gilat anticipates annual revenues from the acquisition to range between $120 million and $150 million by 2025. Also, the company expects the transaction to positively impact its non-GAAP results for 2025. Once Stellar Blu reaches its planned manufacturing capacity, projected for the second half of 2025, its EBITDA margin is expected to exceed 10%.
The deal was finalized with an adjusted cash payment of $98 million at closing. Despite having more than $115 million in net cash at the end of 2024, Gilat utilized $60 million from a $100 million secured credit line with HSBC Bank USA and Bank Hapoalim. The outstanding $40 million from the secured credit line, combined with the company's resources, is anticipated to be utilized to “cover potential earn-out payments” as needed. The three-year loan will have an interest rate of Secured Overnight Financing Rate (SOFR) plus 2.6% to 3.35%. By utilizing a combination of its resources and a secured credit line to fund the acquisition, Gilat aims to maintain financial flexibility to capitalize on emerging market opportunities. Gilat highlighted that the acquisition payment may increase by up to $147 million in cash if the acquired business meets specific operational and strategic milestones within two years of the agreement.
Gilat highlighted that the growing demand for high-quality in-flight Wi-Fi aligns perfectly with Stellar Blu’s expertise in multi-orbit Low Earth Orbit (LEO) and Geostationary Orbit (GEO) IFC solutions. The acquisition is expected to create new growth opportunities across the aviation industry and beyond, with Gilat planning to ship hundreds of Stellar Blu’s Sidewinder terminals in the coming quarters.
Based in Petah Tikva, Israel, GILT is a top provider of satellite-based broadband services, including designing and manufacturing advanced equipment and innovative technology. Gilat’s solutions support a range of applications, including broadband access, cellular backhaul, enterprise services, IFC, maritime, trains, defense, and public safety, all while meeting high service standards. Strength in the defense sector also bodes well for Gilat as demand for defense SATCOM solutions grows due to NGSO expansion and geopolitical events.