Investors piled into Globalstar (GSAT) shares on April 14 after Amazon (AMZN) announced an agreement to acquire the satellite operator for $11.6 billion to strengthen its Leo network.
By integrating GSAT’s critical L-band and S-band spectrum for direct-to-device services, the titan hopes to challenge billionaire Elon Musk’s Starlink.
Following yesterday’s meteoric run, Globalstar stock is up roughly 50% versus its year-to-date low in early February.
The Amazon deal values GSAT shares at $90 each, and given that they are currently trading at about $80, it’s reasonable to assume the market has already baked in most of the buyout premium.
The $10 gap represents potential for a 12.5% gain, which reflects the merger arbitrage spread, a discount that exists for two reasons:
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The transaction isn’t expected to close until 2027.
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It remains subject to regulatory hurdles and operational milestones.
For most retail investors, therefore, the easy money has been made.
Unless a surprise counter-bid emerges, which is unlikely given more than half of the shareholders have already approved the deal, the upside is capped at that $90 ceiling, making Globalstar a low-yield play for those entering now.
GSAT’s true value lies in its harmonized global spectrum and role in powering Apple’s Emergency SOS features — assets Amazon now controls, bypassing years of research and development (R&D).
By integrating the firm’s infrastructure into its Leo satellite division, AMZN is now positioned to dominate the burgeoning direct-to-device market starting in 2028.
And while Globalstar shares are now tethered to a fixed price, Amazon offers an uncapped means of profiting from its satellite connectivity technology.
All in all, investors looking for growth should favor AMZN, as it leverages Globalstar’s greatness to build a global communications powerhouse without any price ceiling.
Investors should also note that Wall Street’s “Moderate Buy” rating on GSAT stock was tied to a $69.75 price target heading into April 14.
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