Amazon.com Inc. agreed to acquire satellite operator Globalstar Inc. in a roughly $11.6-billion deal that would expand the services of its satellite system.
Amazon is offering Globalstar shareholders either $90 in cash per share, or 0.32 shares of Amazon stock with a value capped at $90 a share, according to a statement on Tuesday. That represents a nearly 117% premium over Globalstar’s price from late October, before Bloomberg reported that the company was exploring a potential sale. The deal is expected to close in 2027.
In its announcement of the acquisition, Amazon also said that in 2028 it will enter the direct-to-device, or D2D, market, a nascent effort to use satellites rather than cell towers to connect with smartphones and other mobile devices. In addition, Apple Inc.’s emergency messaging service will transition to Amazon Leo, the company’s recently renamed broadband satellite network. Adding Apple as a customer could be a coup for Leo, which has been slow to get its satellite constellation off the ground, and has lagged SpaceX’s Starlink unit in signing major partners such as airlines.
Bloomberg News reported earlier that Amazon was in advanced talks to buy Globalstar. The satellite company’s shares jumped as much as 11% after trading got underway in New York. Amazon shares rose as much as 3%. AST SpaceMobile Inc., a major competitor in this segment, fell as much 10%.
Satellite broadband is booming, especially in hard-to-reach locations, but Amazon has been hamstrung by delays from rocket builders and other issues as it worked to launch its own offering. Amazon Leo’s roughly 200 satellites in orbit are running limited commercial tests, and the company has a goal of eventually operating more than 7,700 satellites. Earlier this year, Amazon asked the Federal Communications Commission to waive or extend a deadline to have 1,600 satellites aloft by July.
With the acquisition, “customers can expect faster, more reliable service in more places — keeping them connected to the people and things that matter most,” said Panos Panay, senior vice president of devices and services at Amazon, in the statement.
Until now, the two leading players in the D2D market have been SpaceX and Midland, Texas-based AST. Musk’s company has joined with T-Mobile U.S. Inc. to provide connectivity via Starlink satellites to areas without traditional land-based cell service. AST has partnerships with operators such as AT&T Inc. and Verizon Communications Inc. but is still at the early stage of launching its satellite network.
FCC Chair Brendan Carr signaled an openness to the Amazon-Globalstar deal, saying in an interview with CNBC that the acquisition could potentially bring a new competitor to an emerging market.
SpaceX’s fast-growing Starlink unit has more than 10 million active customers and about 10,000 satellites in orbit. It is anticipated to bring in more than $9 billion in revenue this year.
Globalstar, whose chief executive Paul Jacobs is a former Qualcomm Inc. CEO, currently underpins satellite service on the iPhone 14 and later editions, as well as the Apple Watch Ultra 3, allowing users to do things like send messages, reach emergency services, request roadside assistance and share their location.
Amazon’s satellite business last month signed a deal with Delta Air Lines Inc., with the carrier agreeing to use Leo to provide in-flight Wi-Fi service. Starlink has many more partners, though, including United Airlines Holdings Inc., Southwest Airlines Co., British Airways Plc, Air France and Emirates.
Davis, Gould and Einhorn write for Bloomberg.
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