Gilat Satellite Networks Ltd. GILT has closed the deal to acquire Stellar Blu Solutions LLC (“Stellar Blu”), a U.S.-based provider of advanced SATCOM terminal solutions and satellite connectivity. The company announced the acquisition in June 2024.

This move is set to bolster Gilat’s position in the growing In-Flight Connectivity (IFC) market and enhance its commercial and business aviation space. Additionally, the acquisition is expected to drive growth in adjacent high-end mobility sectors, particularly those well-suited for Electronically Steered Antenna (ESA) applications.

What Does This Acquisition Offer?

With Stellar Blu’s strong backlog, Gilat anticipates annual revenues from the acquisition to range between $120 million and $150 million by 2025. Also, the company expects the transaction to positively impact its non-GAAP results for 2025. Once Stellar Blu reaches its planned manufacturing capacity, projected for the second half of 2025, its EBITDA margin is expected to exceed 10%.

The deal was finalized with an adjusted cash payment of $98 million at closing.  Despite having more than $115 million in net cash at the end of 2024, Gilat utilized $60 million from a $100 million secured credit line with HSBC Bank USA and Bank Hapoalim. The outstanding $40 million from the secured credit line, combined with the company's resources, is anticipated to be utilized to “cover potential earn-out payments” as needed. The three-year loan will have an interest rate of Secured Overnight Financing Rate (SOFR) plus 2.6% to 3.35%. By utilizing a combination of its resources and a secured credit line to fund the acquisition, Gilat aims to maintain financial flexibility to capitalize on emerging market opportunities. Gilat highlighted that the acquisition payment may increase by up to $147 million in cash if the acquired business meets specific operational and strategic milestones within two years of the agreement.

Gilat highlighted that the growing demand for high-quality in-flight Wi-Fi aligns perfectly with Stellar Blu’s expertise in multi-orbit Low Earth Orbit (LEO) and Geostationary Orbit (GEO) IFC solutions. The acquisition is expected to create new growth opportunities across the aviation industry and beyond, with Gilat planning to ship hundreds of Stellar Blu’s Sidewinder terminals in the coming quarters.

Based in Petah Tikva, Israel, GILT is a top provider of satellite-based broadband services, including designing and manufacturing advanced equipment and innovative technology. Gilat’s solutions support a range of applications, including broadband access, cellular backhaul, enterprise services, IFC, maritime, trains, defense, and public safety, all while meeting high service standards. Strength in the defense sector also bodes well for Gilat as demand for defense SATCOM solutions grows due to NGSO expansion and geopolitical events.

With this acquisition, Gilat is well-positioned to capitalize on the increasing demand for seamless, high-quality connectivity in aviation and mobility markets, further solidifying its leadership in the satellite networking industry.
On Jan. 6, 2025, Gilat received $9 million in orders from leading satellite operators for its SkyEdge IV and SkyEdge II-c platforms. The company’s cutting-edge SkyEdge technology supports applications like maritime, cellular backhaul and enterprise solutions, with delivery set for within the next 12 months.

Gilat’s Zacks Rank & Stock Price Performance

GILT currently carries a Zacks Rank #2 (Buy). Shares of the company have soared 45.3% in the past six months compared with the industry's growth of 27%.

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Other Stocks to Consider

Some other top-ranked stocks from the broader technology space are InterDigital, Inc. IDCC, BlackBerry Limited BB and Intrusion Inc. INTZ. IDCC and BB presently sport a Zacks Rank #1 (Strong Buy), whereas INTZ carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for InterDigital’s 2024 earnings per share is pegged at $15.19, unchanged in the past 30 days. IDCC earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 163.7%. The company’s long-term earnings growth rate is 15%. Its shares have jumped 54.3% in the past six months.

BlackBerry’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 131.25%. In the last reported quarter, BB delivered an earnings surprise of 200%. Its shares have surged 74.4% in the past three months.

INTZ’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 43.06%. In the last reported quarter, Intrusion delivered an earnings surprise of 16.67%. Its shares have surged 135.2% in the past six months.

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