Israeli-based Gilat Satellite Networks has acquired San Diego’s Stellar Blu Solutions. The deal, valued at up to $245 million, marks a significant expansion for Gilat into the in-flight connectivity (IFC) market.

Gilat, known for its innovative solutions in satellite communication, including modems and amplifiers, will now integrate Stellar Blu’s cutting-edge antenna technology into its portfolio. Stellar Blu specializes in developing electronic antennas specifically designed for aircraft, which feature a narrow profile that reduces drag and improves fuel efficiency. This acquisition is expected to create a comprehensive suite of IFC solutions, enhancing Gilat’s market position.

The acquisition will see an initial payment of $98 million upon closing, with an additional $147 million contingent on Stellar Blu meeting certain business and financial milestones. Gilat anticipates that this acquisition will start contributing to its earnings on a non-GAAP basis from the second half of 2025.

Gilat’s CEO, Adi Tsapadiya, emphasized the strategic fit between the two companies. Stellar Blu is a pioneer in electronic antennas, which are more reliable and cost-effective than traditional mechanical ones. These antennas can seamlessly switch between low-flying satellites, ensuring continuous connectivity even when flying over polar regions. With a backlog of over 800 orders and expected revenues between $100-150 million in 2025, Stellar Blu is poised for significant growth.

Stellar Blu employs around 65-70 people, with its headquarters in San Diego, a centre in Texas, and a development hub in Poland. Tsapadiya highlighted that the acquisition was initiated by Gilat, recognizing the potential for strategic synergy in the IFC market. T

Tsapadiya is confident that the acquisition will face no significant hurdles from antitrust regulators, citing precedent from previous large transactions in the sector, such as the approved but later cancelled Comtech-Gilat deal in 2020. Gilat, which had $104 million in cash at the end of Q1, plans to finance the acquisition primarily through its own resources, with potential use of lines of credit but no immediate plans to issue debt or raise equity.

The IFC market has rebounded strongly post-COVID, with Gilat experiencing two consecutive years of record orders. The integration with Stellar Blu is expected to further enhance its market position, offering customers a comprehensive IFC solution from a single provider.

Despite a 12% drop in its stock value over the past year, Gilat remains a robust player in the satellite communications market, with a current market capitalization of $299 million. This acquisition is a significant step in its growth strategy, potentially driving future revenue and market expansion.

Image credit: A broadband satellite hovering in the space, demonstrating the company’s satellite-based broadband communication solutions (www.insidermonkey.com)