Hi, it's Michelle F. Davis in New York, looking at the rationale behind a multibillion-dollar satellite play by Amazon. Also today, an audacious proposition from the CEO of United Airlines.
Today's top stories
- Amazon to buy satellite company Globalstar for $11.6 billion.
- United CEO pitched Trump on possible tie-up with American.
- Nemetschek to buy Thoma Bravo's HCSS in €2 billion-plus deal.
- Carlyle draws $1.5 billion for asset-backed fund in first round.
- CATL considers up to $5 billion share sale in Hong Kong.
Star power
Amazon today announced that it's buying satellite operator Globalstar for more than $11.5 billion -- its biggest deal since it acquired Whole Foods almost a decade ago.
The takeover adds a new wrinkle to Amazon's nascent satellite business, providing the ability to beam cell service to folks from satellites in low-Earth orbit. Amazon says that, thanks to this deal, it will be able to provide this "direct-to-device" service by 2028.
Once up and running, people, businesses and governments will be able to talk, text and use data via Amazon's satellites rather than cell phone towers. That will help Amazon better compete against the likes of SpaceX's Starlink and AST SpaceMobile.
Big Tech players have been in an arms race to dominate the satellite market but buying Globalstar is really all about access to spectrum, essentially invisible real estate that carries wireless signals and is valuable in part due to its scarcity.
Globalstar got early access to a special type of spectrum, called Mobile Satellite Services, after being founded by Qualcomm and Loral Corp. in 1991 and the company has for years been seen as a key asset for anyone hoping to gain scale in providing satellite cell service. We reported in October that it had attracted interest from Elon Musk's SpaceX.
Amazon, whose satellite program Leo isn't fully live yet, is buying Globalstar for a mix of cash and stock in a deal that values the company at nearly double where it was trading before our October report.
Beyond the spectrum, buying Globalstar gives Amazon access to on-the-ground infrastructure, satellites and a massive customer in Apple, which has agreed to use Amazon Leo to power satellite services on some of its iPhone and Apple Watches.
There's an activist angle to all this that we've been following since 2023, when Anson Funds' Sagar Gupta presented at our activism forum and called for the sale of Globalstar, with Amazon as a potential buyer. Gupta on Tuesday called the deal "value maximizing" and congratulated the board for a highly rewarding outcome for "patient, long-term shareholders."
Starlink is the leader in satellite broadband but the idea is that buying Globalstar can help Amazon close some of that gap. To really catch up, though, though, Amazon will need to figure out how to launch a lot more satellites into orbit -- a fact it was recently reminded of by FCC Chairman Brendan Carr.