Golden Eagle Acquisitions sees an opportunity in melding content and Wi-Fi technology, but Row 44's relatively small foothold may not make it the ideal tool for the blending experiment. Also, users will evolve more and more towards their own entertainment, so the content part will become redundant over time.
Global Eagle Acquisition Corp., an investment vehicle founded by two former Hollywood executives, said Thursday that it is buying two companies that would transform it into a provider of in-flight Internet access and entertainment.
Global Eagle was founded by Harry Sloan, the former chief executive at Metro-Goldwyn-Mayer Inc., and Jeff Sagansky, former president of CBS Entertainment. The company raised $190 million from an initial public offering of stock in May 2011.
It had no operations prior to the acquisition announced Thursday. The deal still needs clearance from regulators but is expected to be completed in January.
Under the deal, Global Eagle will issue about 37 million new shares on top of the 23 million already in circulation.
About 22.5 million Global Eagle shares will be newly issued and paid to the shareholders of Row 44 Inc., a privately held company based in Westlake Village, Calif., that provides Internet access to airplane passengers via satellite.
Row 44′s system allows customers to use Wi-Fi over mobile devices aboard airplanes. Its clients include Southwest Airlines and Norwegian Air Shuttle.
The deal values Row 44 at $250 million.
Global Eagle will also use 14.4 million of its newly issued shares to acquire an 86 percent stake in Advanced Inflight Alliance AG, a publicly traded German company that is the leading supplier of games, movies, general entertainment and applications to the airline industry. That transaction values the stake in AIA at $144 million.
“This is exactly the kind of worldwide digital media opportunity we’ve been seeking for Global Eagle since our IPO,” said Sloan, Global Eagle’s chief executive, in a statement. “This is also a platform for Jeff and me to utilize our media and content relationships and experience to drive expansion and enhancement of inflight content and programming around the world.”
PAR Investment Partners LP is a major shareholder of both Row 44 and AIA. It will end up with a 39 percent stake in Global Eagle.
Current Global Eagle investors will also own 39 percent of the new company. The company plans to change its name to Global Eagle Entertainment Inc. and has applied to the Nasdaq Stock Market to change its stock ticker symbol to “ENT” from “EAGL.”
Right now, Global Eagle shares are mostly held by institutional investors, while Sloan and Sagansky hold about a 14 percent stake. Only about 260 shares a day traded hands in the last three months, but on Thursday, trading volume jumped to 171,800.
Shares rose 5 cents to close at $9.95 on Thursday after the deal was announced.