Amazon.com said on Tuesday that it will buy Globalstar for $11.57 billion, strengthening its nascent satellite division as it seeks to compete with Starlink, a larger rival backed by Elon Musk.
After rising more than 6% over the previous two weeks due to media rumors of the firms’ talks, shares of the satellite company Globalstar were up more than 9% in premarket trade.
Before word of an acquisition surfaced, the stock’s value had almost doubled last year and had increased by almost 12% this year. On Tuesday, Amazon’s stock increased by almost 1%.
Amazon’s aspirations to compete with SpaceX’s Starlink business, which presently has over 10,000 units in space, are bolstered by the acquisition, which grants the internet giant access to Globalstar’s network of about 20 satellites.
According to the firms, shareholders of the satellite company may choose to receive 0.3210 shares of Amazon common stock or $90 in cash for each share of Globalstar they possess.
About half of the 3,200 satellites that Amazon plans to deploy in Earth’s low orbit by 2029 must be operational by a July 2026 regulatory deadline in order to expand its network.
The company is getting ready to launch its satellite internet services later this year and presently has a network of over 200 satellites.
On the other hand, more than nine million people worldwide are currently served by Elon Musk’s Starlink, the leading satellite-based internet service provider.
Globalstar provides voice, data, and asset tracking services to clients in the consumer, government, and business sectors.
Concurrently, Apple, which has invested about $1.5 billion in Globalstar, and Amazon have reached a deal to keep powering satellite-based safety features for iPhone and Apple Watch customers, like Emergency SOS and Find My.
Subject to regulatory approvals and Globalstar reaching certain satellite deployment milestones, the transaction is anticipated to finalize next year.
