Investors may recall Newsat Limited from earlier this year, the company went into administration and was ultimately wound up in the aftermath of conflicts with suppliers and financiers.
A subsequent bidding war erupted with a number of buyers trying to get their hands on the company's assets. The winner turned out to be Speedcast International Ltd (ASX: SDA), a fellow satellite service provider.
Speedcast announced to the market this morning that it has acquired Newsat's teleport and satellite services business, including land and facilities, plant and equipment, and most of the customer and supplier contracts. The company also announced it was retaining some of Newsat's key operations and engineering staff.
Management believes that the Newsat assets and contracts will enhance Speedcast's market dominance in the Asia-Pacific, whilst also "giving us new capabilities to provide services into the Middle East and Africa; it represents an attractive platform for future growth."
Given that Speedcast's purchase includes most of the supplier and customer contracts, it looks as though the blue sky potential of Newsat could well be delivered by its bigger competitor. Shares in Speedcast are up 1.1% since the update, however at a Price to Earnings (P/E) ratio of above 30 they look fairly pricey.
Yet with Speedcast already posting rapid revenue growth of 30% and 'pro-forma' (excluding IPO and other costs) profit growth of 78% before the Newsat acquisition, this fledgling satellite company looks to be on a solid footing for future growth and is a small-cap well worth watching.