Viasat (NASDAQ:VSAT) agreed to sell its Link 16 Tactical Data Links (TDL) business to L3Harris Technologies (NYSE:LHX) for USD$1.96 billion. After all the taxes, fees and other expenses are accounted for, the total amount coming to Viasat should be approximately $1.8 billion.
Viasat has been busy building this segment of its business for the past 25 years. It’s since grown to be a strong provider of Link 16 TDL products and solutions and even become part of the government systems segment. The sale includes Multifunctional Information Distribution System (MIDS) platforms, Link 16 terminals and handheld radios, and the Link 16 to space business.
“This transaction will transform our balance sheet, reduce cash interest obligations, and sharpen strategic focus while enabling continued growth opportunities for the Link 16 business and assuring our customers of a competitive, innovative and reliable source for their future needs. The Link 16 Tactical Data Links business has been an important contributor to Viasat’s growth and earnings and the transaction recognizes the value created by our outstanding team. L3Harris has been a long-time Link 16 strategic partner and has a portfolio that will benefit significantly from these capabilities. Looking ahead, the ViaSat-3 constellation and the Inmarsat acquisition both create greater forward-looking government systems growth opportunities in space-based businesses with more R&D, capital and operational synergies,” said Mark Dankberg, CEO and chairman of the board of Viasat.
Viasat and Link 16
Viasat is a global communications company. It’s been around for 35 years and has helped consumers, businesses, governments and militaries around the world communicate. Its has developed a global communications network for secure and affordable connections on the ground, at-sea or in the air.
The TDL network appears on military aircraft, ground vehicles, surface vessels and operating bases. This gives soldiers and other warfighters access to enhanced communication for voice and data communications.
The Link 16 TDL business earned approximately $400 million in revenue with an estimated $125 million of adjusted earnings before interest, taxes, depreciation or amortization (EBIDTA) for the year ended June 30, 2022. The latter number adjusted by the overhead and corporate expenses expected one year after closing.
“Acquiring Viasat’s TDL product line will amplify our existing capabilities as a leading provider of resilient networking solutions. Global national security requirements are increasing rapidly in this sector, and now we will be able to advance JADC2 and broaden our multi-function, multi-domain mission solutions through integration with Link 16,” said Christopher E. Kubasik, L3Harris CEO and chair.
The majority of the proceeds of the sale will go to reduce Viasat’s net leverage and increase liquidity.