The mobility satellite industry is abuzz with the news that the Marlink Group (Marlink) could soon be acquired by Providence Equity Partners.
This development is not unexpected, given that news of Marlink being up for sale has been one of the worst kept secrets in the industry. In late 2020, rumours emerged from the deep that Inmarsat were interested in purchasing the global service provider. In turn, this sparked other notable satellite operators into investigating the possibility of a vertical acquisition, similar to Viasat and RigNet (https://www.linkedin.com/pulse/viasat-acquisition-rignet-who-benefits-why-valour-consultancy/?trackingId=sJF3yaLEOCuh9vy4WxiPog%3D%3D).
Both Inmarsat and Marlink are owned by APAX Partners, the former being the British entity and the latter, French. While it is unclear how close the connections are between each division, buying a likely multi-billion Euros organisation just because you own another company in the industry isn’t really a valid reason for doing so. Although it should be noted this hasn’t stopped Inmarsat from owning some of its VARs, owning a minority share in Navarino.
To further my argument, Marlink has a significant number of SeaLink vessels using rival Ku-band technologies to Inmarsat. Inmarsat has gone to considerable efforts in getting rid of its legacy Ku-band Xpress Link vessels so taking a boatload more doesn’t make sense. Perhaps dispelling the rationality of this motive to something like a sighting of Nessie in Loch Ness, in the Scottish Highlands.
Private Equity Firm
It was noted another French-backed private equity firm was in the running for purchasing Marlink, starting with C and ending with Q. Knowledgeable folk in the industry had thought this was a done deal, until Jason Rainbow from SpaceNews (https://spacenews.com/maritime-connectivity-specialist-marlink-finds-another-private-equity-buyer/) broke the news that Providence were in pole position and likely to reach the chequered flag first. Whether the financial terms of the acquisition will be publicly disclosed, I am unsure. And asking a Marlink representative to comment would probably be like asking for a chilled red wine in Bordeaux. Unlikely to be positive. However, I am sure if you read the French APAX Partners year-end financial report you will likely find the reported sale price.
Valour Consultancy’s Take
After of the acquisitions of ITC Global and RigNet were completed earlier this year, I wrote a blog post predicting three more key acquisitions (https://valourconsultancy.com/market-roundup-on-maritime-connectivity-acquisitions/) or partnerships. One down, two more to go.
This news should not be surprising considering the prevalence of acquisitions and financial restructuring in the maritime connectivity sphere. Additionally, most private equity firms operate on a four- to five-year cycle and APAX Partners (purchased Marlink in 2016, (https://marlink.com/apax-partners-completes-the-acquisition-of-marlink-airbus-groups-commercial-satellite-communication-business/) is likely looking to capitalise on Marlink’s incredible performance over the past several years, particularly given the pandemic.
Marlink, from a maritime perspective, has likely doubled its number of VSAT vessels from 2016 to 2021. However, I am not sure if the firm has matched this by doubling maritime airtime and service revenues.
It’s possible the firm’s maritime business may have slowed down a touch this year and the new owner will likely spur Marlink on further as it looks to increase profitability in its services and also bring ITC Global and other new customers into its business.
I think we will see a strong second half of the year performance from Marlink. I am looking forward to seeing how things unfold with other companies in the ecosystem, some doing well overall and others looking to specialise into niche sectors.
Valour Consultancy is a trusted provider of independent market intelligence and actionable consultancy for the maritime, aviation and other mobility sectors. To learn more, visit our website (http://www.valourconsultancy.com/maritime).
Source: By Joshua Flood, Senior Research Consultant, Valour Consultancy
The views expressed hereby are of the author’s and don’t necessarily reflect those of Hellenic Shipping News (www.hellenicshippingnews.com).