Rick Baldridge is on a mission worthy of a James Bond plot: to convince Her Majesty’s Government he can safeguard state secrets. The head of US satellite company Viasat is closing in on a $7.3billion (£5.4billion) takeover of British rival Inmarsat, seen as the jewel in the crown of the UK space industry.
This week he flies into London for a charm offensive with media and officials examining the deal, which is its biggest ever takeover.
‘We’re a growth company. The Government should think, ‘Here’s a technology company going to invest in high quality UK jobs in the area of space,’ Baldridge says as he finesses his pitch in his first British newspaper interview since agreeing the deal in November.
Space man: Rick Baldridge, the head of US satellite company Viasat
Viasat needs to persuade officials in Whitehall that it can be trusted with the highly sensitive information transmitted by Inmarsat: from locations of tanks in war zones to identities of hackers trying to take control of ships.
‘We have procedures to ensure classified information is protected and operate that way in the US, where only limited people have access to certain pieces of information,’ Baldridge says, speaking via Zoom from California.
The issue is of particular significance as Inmarsat is a bidder for a £6billion contract to upgrade the UK military’s secure communications network. Inmarsat, the London-based satellite stalwart founded in 1979, handles communications for the military, ships and commercial airlines.
Baldridge, 63, says the takeover is not contingent on Inmarsat winning the £6billion contract. But he adds: ‘I like to win every contract we bid on so we’re big cheerleaders for the Inmarsat team. That’s a very, very important contract. I think they have a really good chance.’
Baldridge says Viasat’s skill in handling sensitive data is evidenced by its receipt of America’s James Cogswell award for careful protection of intelligence, bestowed on a tiny fraction of firms. Baldridge’s assurances will form part of a string of commitments Viasat will make to the British Government to secure the Inmarsat deal, along with pledges to invest further here.
The sale of British defence firms to US bidders became a headline issue last year. The National Security and Investment Act was introduced this month to make it harder for UK firms of national importance to fall into foreign hands. The Government could refer Inmarsat’s takeover for deeper scrutiny under these powers.
The takeover of aerospace and defence giant Meggitt by Parker-Hannifin and the acquisition of Ultra Electronics by US buyout firm Advent are being assessed for threats to national security.
Tory MP Tom Tugendhat, chairman of the Foreign Affairs Select Committee, has written to Business Secretary Kwasi Kwarteng calling for a review of the Inmarsat purchase and concerns about selling ‘strategically important’ UK companies to overseas counterparts.
Viasat and Inmarsat already overlap on national security projects. Both work with the Ministry of Defence and have contracts on the US President’s Air Force One plane. Inmarsat was snapped up before – in 2019 by a consortium of private equity firms, including London’s Apax and New York’s Warburg Pincus, as well as pension funds.
If this latest deal is not held up, it could be completed in the second half of this year. Baldridge says it would mark a bold step towards creating a new hub in Britain.
Last spring, Viasat announced it would build a £300million cyber security base in Aldershot, Hampshire, to help fend off attacks on Britain’s communications networks and satellites. As such, Baldridge says the swoop was not opportunistic: ‘If we didn’t see the value, we certainly would have backed away and let somebody else do it.’
Viasat has identified $80million a year of ‘synergies’ – cost cuts from overlaps – at the two companies. So should staff at Inmarsat’s HQ at London’s ‘Silicon Roundabout’ in East London be concerned? Baldridge says: ‘My message to employees is: we’re going to hire really strong technical talent. If you’re an engineer and want to work on cool things in the space area there’s just enormous opportunities.’
Viasat has 6,000 employees and is valued at $3.3billion. It has four satellites which hang about 22,000 miles above Earth in geostationary orbit to provide communications for the military as well as airlines.
Industry watchers have claimed it is a golden age for investment in space. The Mail on Sunday revealed in November last year that Viasat beat off competition from Luxembourg’s SES – which made the first satellite for Sky TV – to agree the deal to buy debt-laden Inmarsat.
There is also a trend for tycoons to get involved, led by billionaire entrepreneurs Jeff Bezos and Elon Musk. Baldridge, in the industry for 22 years, says the huge sums being poured into the space industry represent a ‘frothy period’ but Viasat is investing more prudently.
Viasat is building a 300-strong Leo constellation that will compete with Musk’s SpaceX and the UK Government-backed OneWeb when completed in the next four years.
Baldridge says the Inmarsat deal can aid Viasat’s mission to improve broadband communication – especially in towns and cities – amid unprecedented internet demand in the pandemic. Of the growing use of video calls, not to mention streaming shows from home, he says: ‘Video is dominating demand for bandwidth growth, and demand is concentrated where people are.’
Viasat hopes to improve wi-fi on planes too, cutting costs for airlines and passengers. And Baldridge also hopes that this week can help Viasat’s global ambitions take flight.
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