Carronade urges Viasat to spin off defense unit

Carronade Capital Management, which owns approximately 2.6% of Viasat Inc. (NASDAQ: VSAT), has called for the satellite communications company to separate its Defense and Advanced Technologies (DAT) business through a spin-off or initial public offering.

In an open letter, the investment firm argued that the DAT segment could trade as a standalone company at valuations between $50 to over $100 per share, compared to Viasat's current stock price. Carronade based this assessment on comparable defense technology companies that historically trade at 20 to 40 times enterprise value to EBITDA multiples.

The DAT business reported revenue growth of almost 17% in the last 12 months, excluding non-recurring litigation settlement contributions, with EBITDA margins of 28%. The segment's backlog grew 50% year-over-year in the fourth quarter of fiscal 2025, with a book-to-bill ratio of 1.2 times.

Carronade compared DAT to mid-cap defense technology companies including Kratos Defense & Security Solutions, AeroVironment, and Mercury Systems. The firm noted that Viasat currently faces nearly 20% short interest, which it attributes to investor concerns about the Communications Services segment.

The investment firm believes separating DAT would allow both businesses to be valued independently and provide the remaining Communications Services business with reduced debt and improved cash flow generation prospects. Viasat recently received a $568 million settlement from Ligado Networks, scheduled for fiscal year 2026, along with a lease stream extending through 2107.

Carronade, founded in 2019 and managing approximately $2.5 billion in assets, has been invested in Viasat since 2023. The firm's proposal comes as Viasat conducts a strategic review of its business portfolio.

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