Activist Carronade pushes Viasat breakup, says valuation could jump 500%, FT reports

Activist investor Carronade Capital Management, holding a 2.3% stake in Viasat and $30 million of its debt, is urging the satellite communications firm to split its broadband and defense units. Carronade asserts that this strategic separation could unlock up to $11 billion in value, potentially increasing Viasat's total valuation by over 500%, and plans to issue an open letter to shareholders to advocate for the move.

Analysis

Activist investor Carronade Capital Management is exerting significant pressure on Viasat (VSAT.O) to unlock shareholder value through a corporate restructuring. Holding a 2.3% equity stake and $30 million of the company's debt, Carronade is advocating for the spin-off of Viasat's defense unit from its commercial broadband operations. The activist's core thesis, which it plans to detail in an open letter to shareholders, is that the current conglomerate structure results in a substantial valuation discount. Carronade projects that a separation could increase the company's total valuation by over 500%, potentially unlocking as much as $11 billion in combined value. This event introduces a major catalyst for the stock, shifting the focus to how Viasat's board and management will respond to this public demand for a strategic breakup.

Key Decisions for Investors

• Investors should view the activist campaign as a primary short-to-medium term catalyst for VSAT, and closely monitor the company's formal response, as it will be a key determinant of the stock's trajectory.
• A sum-of-the-parts (SOTP) valuation analysis is warranted to independently assess the credibility of Carronade's projected 500% valuation increase and to model potential outcomes of a successful spin-off.
• Given the proposal to separate the defense and broadband units, credit investors should re-evaluate Viasat's bond covenants and the potential impact on the credit profile of the respective post-spinoff entities.