(Source: Business Wire)ViaSat Inc. (Nasdaq: VSAT), a producer of innovative satellite and other wireless communication systems, has signed a definitive agreement to acquire privately-held WildBlue Communications Inc., the premier Ka-band satellite broadband service provider, in a cash and stock transaction valued at $568 million. The combination sets the stage for accelerated growth and expansion of the WildBlue broadband service using ViaSat next generation network technology, featuring the high-capacity ViaSat-1 satellite scheduled to launch in early 2011.

"WildBlue and ViaSat have been close partners for nearly a decade and today's announcement is the logical next step," said Mark Dankberg, chairman and CEO of ViaSat. "By integrating ViaSat-1 and its ground network technology into the WildBlue operational and distribution platform, we believe we can meaningfully reduce our operational execution risks. Joining forces with ViaSat provides fast and efficient access to next-generation capacity for the WildBlue business and its subscribers. This synergy, coupled with the improved free cash flow profile WildBlue has attained in the last year, has enabled us to structure what we believe is a highly capital efficient transaction that offers immediate financial benefits to ViaSat. In our view, it's exceptional to be able to make an acquisition with so many strategic benefits under such favorable financial terms."

In acquiring WildBlue, ViaSat gains one of the most successful and fastest growing wholesale and retail broadband service providers in the United States. In less than five years, WildBlue has become one of the top twenty broadband U.S. ISPs with over 400,000 customers (as measured by total subscribers according to data compiled by Leitchman Research and ISP Planet). The WildBlue high-speed, two-way Internet service for residential and small business customers, powered exclusively by the ViaSat SurfBeam® networking system, provides fast, reliable connections regardless of the customer's location. WildBlue pioneered the use of "unprocessed" Ka-band spot beam technology to increase capacity and lower bandwidth costs, portending the value potential for the technology innovations ViaSat-1 will make possible.

"Our new satellite," Dankberg continues, "will have nearly all of its capacity aimed at those areas where WildBlue growth is constrained by lack of cost-effective bandwidth. The planned launch of ViaSat-1 in early 2011 is expected to multiply WildBlue total network capacity by more than tenfold, and by a factor of over 20 in those areas with the highest demand at a fraction of its current bandwidth costs. The increased bandwidth coupled with next generation ViaSat network technology is expected to enable WildBlue to increase upstream and downstream user speeds by factors of 3 to 5 times in those high-demand areas at current subscription prices, substantially raising the value to consumers."

David Leonard, CEO of WildBlue, commented, "Over the past several years, we focused on acquiring and retaining customers, scaling our business and generating cash flow. The combination with ViaSat sets the stage both strategically and financially for the next phase of growth at WildBlue. We believe ViaSat, through its success with WildBlue in the Unites States, Barrett XPlornet® in Canada, and Eutelsat ToowaySM in Europe, has achieved the economies of scale needed to make satellite broadband affordable and competitive. With the addition of ViaSat-1 capacity to our network, we believe we can grow our subscriber base to become a top ten broadband ISP in the U.S. and expand further domestically and internationally."

In addition to accelerating the growth of WildBlue's consumer satellite broadband business, the transaction also promotes organic growth opportunities for other ViaSat commercial and defense businesses.

"WildBlue's satellites accelerate our entrance into new Ka-band broadband applications by over a year. We have been making steady progress pursuing defense and mobile broadband markets in the U.S. and globally," continued Dankberg. "We are very excited about integrating the WildBlue team into all of our global broadband technology and service initiatives."

A Combination Rooted in Integration

Since announcing plans to build ViaSat-1 in early 2008, ViaSat has been in discussions with several potential strategic and financial partners.

"WildBlue is in a unique position and was always our first choice as a partner," said Dankberg. "We have worked together for a decade creating the Ka-band broadband market. We know and complement each other extremely well -- creating an integrated technology and services company. The key was structuring a financially attractive transaction that fairly apportions value for all the constituencies; preserves the resources and relationships that are the source of technical, operational and market advantages; and has clear, consistent purpose and governance.