Singapore Technologies Engineering (ST Engineering) has agreed to purchase Belgium-based aircraft modem provider Newtec Group, a move reflecting ST's interest in expanding its satellite communications business.
The agreement, which remains subject to US, French and Austrian approvals, calls for Singapore Engineering's European unit to buy 100% of Newtec for €250 million ($280 million).
ST Engineering says the move will give it a greater share of the "fast-growing" satellite communications industry.
The acquisition will also align ST Engineering with Panasonic Avionics, a major provider of inflight entertainment (IFE). Newtec makes the on-aircraft modems that transmit data between aircraft satellite antennas and Panasonic's IFE systems.
Panasonic thinks ST Engineering's ownership will promote development of improved technology.
“We believe that the combined new business will speed time to market and accelerate the innovation cycles," says Panasonic's chief operating officer Mark Jennings.
ST Engineering expects the deal will close in the second half of this year and anticipates the acquisition will generate revenue and cost synergies of S$200 million ($148 million).
ST Engineering previously acquired modem maker iDirect, a US-based competitor of Newtec. Panasonic initially paired its IFE with iDirect's modems, but has since switched to Newtec's modems, Panasonic says.
Currently, 780 of 2,000 commercial aircraft equipped with Panasonic's Ku-band-based IFE have Newtec modems, and Panasonic expects all 2,000 aircraft will have Newtec equipment by year-end.
"We have an aggressive plan to upgrade all remaining and future aircraft to this technology. We have shared our future development plan with the combined ST Engineering team, and they are ready to meet that schedule," says Panasonic's Jennings.
ST Engineering says the acquisition will help it benefit from demand for non-aviation satellite communication applications, such as tele-medicine, tele-education and automotive and marine uses.