A separate industry source said Apax Partners has been shopping Marlink as it nears the end of its hold period, a time when private equity firms expect to make returns on an investment — typically around five to seven years.
Apax Partners and Marlink declined to comment on the rumors.
The timing of the potential sale has caused some head-scratching in the financial community, according to the private equity source, because it comes as competitors Speedcast and Global Eagle Entertainment — two potential suitors — restructure their businesses.
Speedcast has just emerged from Chapter 11 protection and Global Eagle Entertainment expects to exit its process before the end of March.
Selling Marlink as these activities have yet to settle deprives the company of potential bidders, the person added.
Global Eagle Entertainment’s capacity to acquire companies is restricted while under Chapter 11 rules, although satellite operator Intelsat was recently able to overcome these obstacles to buy part of in-flight connectivity provider Gogo.
Speedcast exited its restructuring process Mar. 11, but its new private equity owner Centerbridge Partners likely still has its hands full as the satcoms provider looks to integrate its existing networks.
Joe Spytek, Speedcast’s CEO, recently told SpaceNews that the company intends to avoid the kind of large-scale acquisitions that it used to make.
“The idea is not to be the roll-up machine that Speedcast was in the past,” Spytek said.
Running a sale during this time also complicates the possibility of a buyer looking to consolidate Marlink, Speedcast and Global Eagle Entertainment into a mammoth satellite communications provider.
British satellite operator Inmarsat is seen as the most likely strategic buyer, largely because of the synergies it would gain with its existing maritime business.
Inmarsat’s Global Xpress constellation runs on Ka-band, and buying a major player in Ku-band would help it control more of that market.
There is also an ongoing trend of satellite operators climbing down the value chain to buy service providers, as a way to combat market uncertainty amid a decline in satellite capacity prices.
Apax Partners was part of a consortium of bidders that acquired Inmarsat for $3.3 billion toward the end of 2019. Marlink is also one of Inmarsat’s biggest partners in the maritime sector.
An Inmarsat spokesperson said: “We don’t comment on rumors and speculation.”
A strategic buyer is thought more likely than a financial acquirer because of Marlink’s limited growth potential.
“There isn’t a ton [of growth] left in terms of converting people to Ku,” the private equity source said.
“There’s some left, but it also requires a lot of [capital expenditure], so it’s not as if this is going to be a major cash generation machine.”
Marlink announced plans Jan. 13 to buy satellite solutions provider ITC Global, which has operations in the maritime, energy and enterprise markets, to diversify operations.
In 2019, Marlink generated about $484 million in revenue. It has yet to release this figure for 2020.
In March 2018, Marlink completed its acquisition of Spain-based OmniAccess, a connectivity provider to high-end superyacht and boutique cruise line customers. The company said at the time that the combined group has about 1,000 employees, supporting an install base of more than 4,000 VSAT vessels.