ViaSat Pays $568M to Buy WildBlue and Connect Its Satellite With High-Speed Internet Customers

10/1/09Follow @bvbigelow

Satellite Communications specialist ViaSat Inc. (NASDAQ: VSAT) says it is buying WildBlue Communications, a suburban Denver company that provides high-speed Internet access to mostly rural areas in a cash-and-stock deal valued at $568 million.

Until now, Carlsbad, CA-based ViaSat has specialized in developing satellite-based communications hardware and software, including modems, radios, and ground stations, for use by military and commercial satellite customers. But in a sharp departure from its business strategy, ViaSat announced plans in early 2008 to build and launch its own $450 million communications satellite to provide high-speed Internet service. The company said at the time that its system is designed to provide faster broadband speeds than existing satellite-based cable and DSL providers, at the same cost.

ViaSat CEO Mark Dankberg says in a statement that the two companies have been close partners for nearly a decade, and integrating ViaSat and its ground network technology with WildBlue’s Internet platform helps to reduce the business risk of its satellite venture. “Joining forces with ViaSat provides fast and efficient access to next-generation capacity for the WildBlue business and its subscribers,” Dankberg says.

The deal also apparently helps relieve Colorado’s Liberty Media of its ownership stake in WildBlue, according to press reports. Liberty Media, which owns a 37 percent stake in WildBlue through Liberty Entertainment, has been spinning off some operations to ease its potential acquisition of DirecTV Group, the largest provider of satellite-TV service in the U.S.

Since 2005, WildBlue has become one of the top 20 broadband Internet service providers in the U.S., with over 400,000 customers, according to ViaSat.

The Carlsbad company said last year it plans to launch its satellite in early 2011. ViaSat said at the time that its “ViaSat-1″ would be built by a subsidiary of Loral Space & Communications, and would become the North American counterpart to Eutelsat’s high capacity Ka-band broadband satellite planned for Europe, which is set for launch next year.

ViaSat says it anticpates the deal, when completed, will consist of $443 million in cash and $125 million in newly issued ViaSat shares. The company also says the deal will be subject to regulatory clearance and other conditions, and is expected to close before April 2.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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