Viasat’s unexpected Link-16 sale

Viasat completed the sale of its Link-16 business to L3Harris for $2 billion, a deal that came as a surprise because it did not align with speculation or the company’s apparent rationale for divestitures. Mark Dankberg, Viasat CEO, said during the company’s third quarter earnings call August 8 that Viasat prioritized synergistic business units and those with strong growth potential. Given that Viasat’s Link-16 business was aligned with the company’s future and a promising growth sector, the only rationale that makes sense to us is that Viasat wanted to do something to offset heavy spending on Viasat-3, reining in the company’s debt load. Three years of delays and technical challenges have, by our estimation, added ~$1 billion to the cost of Viasat-3. By selling its Link-16 business, Viasat expects to net $1.8 billion in proceeds, offsetting those costs and providing additional capital. Link-16, a tactical data communications technology, fit that criteria well for the following reasons:

- Viasat has multiple contracts to provide Link-16 hardware for the Space Development Agency’s proliferated LEO constellation that could number up to 1,000 satellites.

- Viasat was building a Link-16 satellite with Blue Canyon called XVI meant to demonstrate how to extend Link-16 to space, enabling a new method of secure, beyond-line-of-sight communications.

- Viasat has strong interest in the Pentagon’s quest to connect all sensors through the Joint All Domain Command and Control (JADC2) program, which will incorporate Link-16.

- Dankberg described Link-16 from space as having “significant synergy opportunities” and an area in which Viasat has been successful.

SOURCE: https://www.prnewswire.com/news-releases/viasat-completes-sale-of-link-16-tactical-data-links-business-to-l3harris-technologies-for-1-96-billion-301712692.html