Carronade Capital Management, an activist hedge fund led by Elliott Management alum Dan Gropper, is pressing satellite broadband provider Viasat to split off its defence business in a move it claims could unlock up to $11bn in shareholder value, according to a report by the Financial Times.
In an open letter to shareholders, Carronade is publicly calling on the California-based company to pursue a strategic break-up, arguing that the defence technology division is under-appreciated and overshadowed by Viasat’s better-known satellite broadband unit.
Viasat provides in-flight WiFi and residential satellite internet, competing directly with Elon Musk’s Starlink and Amazon’s Kuiper. But Carronade contends its defence segment – offering encrypted communications and military-grade technologies – has strong standalone value, especially amid rising global defence budgets.
According to people familiar with the matter, Carronade estimates Viasat’s enterprise value could increase by over 500% through a spin-off, citing the high strategic relevance of defence tech businesses in today’s geopolitical environment. The hedge fund has already built a 2.6% equity stake and holds an additional $30m in Viasat debt, signalling a high-conviction position.
The move comes as Viasat struggles to keep pace in the ultra-competitive satellite communications market. Despite its $7.3bn acquisition of Inmarsat in 2021, Viasat’s share price has tumbled nearly 60% over the past five years, weighed down by market dominance from rivals like Starlink.
In its most recent fiscal year, Viasat generated $4.5bn in revenue, with $1.2bn from defence and the remainder from communication services. The company carries about $7.5bn in debt.
Carronade has described its engagements with management as “constructive,” but is urging the board to accelerate its ongoing strategic review ahead of the next earnings release on 5 August. CEO Mark Dankberg has so far refrained from commenting directly on a potential spin-off, though acknowledged on a May earnings call that the defence unit is “doing really well”.
