Filed by RigNet, Inc. (Commission File No. 001-35003) Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: RigNet, Inc. (Commission File No. 001-35003) |
This filing relates to the proposed merger involving Viasat, Inc., a Delaware corporation (“Viasat”), Royal Acquisition Sub, Inc., a Delaware corporation (“Acquisition Sub”) and RigNet, Inc., a Delaware corporation (“RigNet”), pursuant to the terms of that certain Agreement and Plan of Merger, dated as of December 20, 2020, by and among Viasat, Acquisition Sub and RigNet.
The following is an article published on December 21, 2020 on Via Satellite containing an interview with Richard Baldridge, President and Chief Executive Officer of Viasat, Steven Pickett, President and Chief Executive Officer of RigNet, and Lee Ahlstrom, Senior Vice President and Chief Financial Officer of RigNet.
Viasat, RigNet CEOs Talk Value in Vertical Integration Acquisition
Via Satellite
December 21, 2020
By Rachel Jewett
https://www.satellitetoday.com/business/2020/12/21/viasat-rignet-ceos-talk-value-in-vertical-integration-acquisition/
Viasat has agreed to acquire RigNet, the operator announced Monday, a move that will make Viasat a vertically-integrated player in the energy sector. The all-stock transaction gives RigNet, which provides networking solutions for remote oil and gas operations, an enterprise value of approximately $222 million.
This is another move from Viasat to diversify its portfolio ahead of the launch of its ViaSat-3 constellation, after the operator announced in November it is purchasing the remaining share of European wholesale broadband services business Euro Broadband Infrastructure (EBI). The first ViaSat-3 satellite is targeted for launch at the end of the calendar year 2021.
Viasat plans to incorporate RigNet into its Global Enterprise and Mobility business unit, led by President Jimmy Dodd. The company has more than 650 customers and has deployed more than 1,200 onshore and offshore sites and 11,000 Industrial Internet of Things (IIoT) sites. The transaction is expected to close by mid-calendar year 2021 and is subject to regulatory approval.
Viasat CEO Rick Baldridge; RigNet CEO Steven Pickett; and RigNet CFO Lee Ahlstrom spoke with Via Satellite about diversifying Viasat’s connectivity portfolio, and the companies mutual focus on using Artificial-Intelligence (AI) and Machine Learning (ML). Baldridge said the deal fits in with Viasat’s long-term strategic plan. “As we build out the ViaSat-3 satellite constellation that covers the globe, we’re going to invest in verticals that we’re not in, and expand the ones that we’re in,” he said.
VIA SATELLITE: How did this deal come about, and how long has it been in the works?
Baldridge: From our perspective, it always made sense to do this at a time when we could bring something to the party, rather than just having RigNet built on. Doing this just in advance of our global launch is going to allow us to bring something that their shareholders should benefit from. We either had to start acquiring and building an in-house team, or do something like this. It would take us a long time to build the tools that RigNet has put together, and longer to develop the customer relationships.
VIA SATELLITE: This acquisition makes Viasat a vertically integrated energy communications provider. Why were you interested in making that play in the energy market?
Baldridge: We’ve always felt that there’s this stack of businesses — at the top of that stack are the ones that are much harder to serve, so your value to them is really high. At the bottom of that, quite frankly, is residential broadband, where people have more choices. We are looking for those verticals where the value is highest. Oil and gas is one that we’ve had our eye on for a long time, but also the enterprise verticals that go along with those types of tools, like mining. Even the application for maritime, although it looks a lot like commercial air, there’s another enterprise-type application there.
We’re looking for all of those verticals where we have more value. This was a vertical we were going to go into, and we think we found the perfect partner. We’ve been very impressed that they’re not just limited to oil and gas, there’s some other applications as well.
Pickett: Although we are predominantly in the energy vertical, what we do at the software and cybersecurity layer applies to any business application. For example, one large producer of iron ore uses our machine learning platform to manage the flow of iron ore from the mine all the way to delivery in China across a fleet of maritime vessels. Once you apply machine learning, you have lots of different ways that you can extract value, because you know much more deeply what’s happening within the business.
VIA SATELLITE: Both of you just mentioned how RigNet’s solutions are applicable beyond the offshore drilling application. The announcement mentioned both companies being stronger after the acquisition to expand in the mining, shipping, and maritime. What could that look like for Viasat and RigNet combined in the future?
Baldridge: We bring 100 times the bandwidth to the market in these areas than what was previously available. That fundamentally changes the capability set that you’re bringing. And then we can take those things into other verticals that we were going to go into anyway, like shipping or maritime. This is a combination where we can take the tools that had been developed in RigNet, and use those across the enterprise — and we can take the vertical [Rignet] has been in, and bring capability to that vertical.
Lee Ahlstrom, RigNet CFO: There’s a growing hunger in energy, and some of these other markets, to bring applications like machine learning into the business to improve financial and operational performance. Many of these harsh remote locations have been constrained by the size of the pipe. With Viasat bringing that much bigger pipe — high throughput, high capacity — that is going to open up a world of opportunities for these customers. Not just the ones that we have today, but the ones who are seriously starting to look at how to apply these new technologies to their businesses.
VIA SATELLITE: Was there any concern on Viasat’s end with effects from the pandemic on the energy sector?
Baldridge: It’s not only the effects from the pandemic, but there’s a social negative associated with fossil fuels. We agree that there should be major investments in non-fossil fuel energy. But this is a sector that’s going to be around for a long time, and we think it will be a good one for us to operate in. The amount of data that they need to more efficiently do their businesses is just growing exponentially, we love that type of a market.
I think the pandemic is going to be over. We will get through this and things will recover. I don’t know what they’ll look like when they do, but certainly the need for data, a lot of bandwidth, will continue to grow, and that’s perfect for our satellites.
Pickett: There are a number of supermajors in the fossil fuel business who have been very vocal about the fact that they’re not fossil fuel companies — they’re energy companies, and they are making pivots to be renewable energy companies. Given the strong and long relationships we have with those customers, we’re in a position to grow with them into renewable energies as well. When you think about new, renewable energies, there tends to be much newer technology deployed, which creates the need for bigger networks, and the need for more real-time machine learning.
VIA SATELLITE: Does RigNet currently purchase capacity from Viasat, and will all RigNet capacity be purchased from Viasat in the future?
Pickett: We don’t buy satellite capacity from Viasat at this point. That will change when we become a part of Viasat and the ViaSat-3 launch.
Baldridge: That’s one of the reasons why we haven’t launched this effort earlier, we needed to wait until the launch of ViaSat-3 satellites was in sight. There’s definitely some cost savings there in the future. But we buy capacity from Ku-band satellites for business jets, for instance, and we will maintain relationships with those satellite operators. What we are trying to do is increase the amount of capacity that these users are using by a factor of 20, 30, or 50 — not to give them a discount that doesn’t get us anywhere, or get them anywhere. The reality is to bring a lot more capacity at a very cost-effective rate to these users, and have them do more than they’re doing today.
VIA SATELLITE: Steve, can you speak more to the benefit the acquisition will bring to RigNet’s customers?
Pickett: No doubt, access to more capacity. As [customers] do more with real-time machine learning, because they have to get cost out of their business, they’re going to need more network capacity. We’re going to be able to get that from Viasat. And Viasat has its own set of tools as well, so we’ll be looking for ways to supplement the tools that we have with what Viasat has, in order to provide an even more robust bundle for end customers.
VIA SATELLITE: I understand RigNet will be incorporated into the enterprise and mobility business unit of Viasat. Will RigNet maintain its branding and its workforce?
Baldridge: We haven’t gotten into the integration planning, or disclosed any of that. We certainly plan to keep the RigNet presence and perhaps grow that in the Houston area. We love their location, and we like to do business out of Texas, and so it should be a center that we see grow. In most of the acquisitions we have made, we like having strong leadership. We get behind those leaders instead of shutting things down and consolidating operations. Having the team in Houston is a major net positive for us.
VIA SATELLITE: RigNet has operations in many different countries around the world. Rick, in a recent interview with Via Satellite, you talked about Viasat’s EBI acquisition, which is different, but also focuses on the globalization push with the ViaSat-3 constellation. Can you talk about how the RigNet deal fits in with Viasat’s globalization efforts?
Baldridge: We will leverage the team that’s already in these places. I’ve talked quite a bit about us being indigenous or local in our markets and that’s how we’re going to approach building a team out on a global scale. This gives us a good running start to that, as EBI did in Europe. Having people that already have access to the regulatory environments in over 50 countries, that’s fantastic help for us.
VIA SATELLITE: What potential do you see with RigNet’s AI offerings and IIOT offerings, to develop those further together?
Baldridge: We started a fairly heavy data analytics effort, we’ve hired math PhDs that are working here today. For instance, we’ve developed artificial intelligence engines on how to select the right customer to use our residential broadband business and predict churn. So that’s a perfect fit between what RigNet has been doing, and what we’re doing with machine learning and AI. I don’t have a perfect answer in terms of what we’re going to do on day one. I know that this is an area of hyperfocus for us. It’s an area where RigNet has been making great progress, I know we have 100% alignment on what to do here. Efficient use of the networks is really important, but what’s more important is to help the customers change their business models based upon data they can get through those tools.
VIA SATELLITE: You said earlier that Viasat plans to expand into verticals that you’re not currently in. Will we see more acquisitions from Viasat in 2021?
Baldridge: You’ll see more entries into verticals — whether that’s through acquisitions or we build that ourselves. But you’ll definitely see more new verticals announced as we approach launch on these satellites.
Important Additional Information and Where to Find It
This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a solicitation of any vote or approval. STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS, THE REGISTRATION STATEMENT AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC REGARDING THE TRANSACTION CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. These documents (when they become available) will contain important information about the proposed transaction that should be read carefully before any decision is made with respect to the proposed transaction. These materials will be made available to stockholders of RigNet at no expense to them. Investors will be able to obtain free copies of these documents (if and when available) and other documents filed with the SEC by RigNet and/or Viasat through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by RigNet will be available free of charge on RigNet’s internet website at http://www.rig.net. Copies of the documents filed with the SEC by Viasat will be available free of charge on Viasat’s internet website at http://www.viasat.com.
Participants in the Solicitation
Viasat, RigNet, their respective directors and certain of their respective executive officers may be considered, under SEC rules, participants in the solicitation of proxies from the stockholders of RigNet in connection with the proposed transaction. Information about the directors and executive officers of RigNet is set forth in its Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 11, 2020, and its proxy statement for its 2020 annual meeting of stockholders, which was filed with the SEC on March 30, 2020. Information about the directors and executive officers of Viasat is set forth in its Annual Report on Form 10-K for the year ended March 31, 2020, which was filed with the SEC on May 29, 2020, and its proxy statement for its 2020 annual meeting of stockholders, which was filed with the SEC on July 23, 2020. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests in the transaction, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
Forward Looking Statements
This material includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 – that is, statements related to future, not past, events. Forward-looking statements may include comments about the expected future benefits, compensation, and employment, , potential layoffs and severance, benefits of the transaction, potential value to be realized by RigNet’s employees and stockholders, timing of and ability to ultimately close the transaction, Viasat’s financial position and long-term strategy, and other similar statements. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “anticipate,” “believe,” “intend,” “will,” “expect,” “plan” or other similar words. These forward-looking statements involve certain risks and uncertainties, including those risks set forth in Item 1A – Risk Factors of the Company’s most recent 10-K filing, and Item 1A- Risk Factors of the Company’s 10-Q filing for the quarter ended March 31, 2020, filed with the SEC on Monday, May 11, 2020, and ultimately may not prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. For further discussion of risks and uncertainties, individuals should refer to RigNet’s SEC filings. RigNet undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this communication. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication. All forward-looking statements are qualified in their entirety by this cautionary statement.