Amazon In Talks With Apple to Acquire Globalstar For $9 Billion – The Special Situations Report Episode #61

Episode Summary

Executive Summary: Episode 61 focuses on four event-driven themes: a rumored Amazon bid for Globalstar amid its Apple satellite partnership, Eli Lilly’s $6B+ acquisition of Centessa with a large CVR tied to sleep-disorder drug milestones, Unilever’s tax-efficient reverse Morris Trust with McCormick, and Irenic Capital’s activist campaign at Snap. The hosts emphasize how special situations often take time to play out and how structure matters as much as headline valuation.

Main Topics: Globalstar and the rumored Amazon acquisition (Priority: 5/5): The hosts revisit Globalstar’s transformation from an expensive, unprofitable satellite company into a major winner from Apple’s partnership, then discuss FT reporting that Amazon is in lengthy talks to acquire it. They highlight strategic fit, satellite industry competition, and the complication of Apple’s contractual stake and capacity rights. Eli Lilly’s acquisition of Centessa with a large CVR (Priority: 5/5): They analyze Lilly’s $6B+ purchase of Centessa, a biotech developing treatments for narcolepsy and idiopathic hypersomnia. The discussion centers on the deal’s cash-plus-CVR structure, the competitive threat to Jazz’s sleep franchise, and how contingent payments are common in biotech M&A. Unilever’s reverse Morris Trust with McCormick (Priority: 4/5): The hosts explain Unilever’s food-business separation via a reverse Morris Trust, combining the unit with McCormick to create a larger combined company while preserving tax efficiency. They discuss ownership split, valuation, expected synergies, and why McCormick shareholders reacted negatively. Irenic Capital’s activist campaign at Snap (Priority: 4/5): Irenic’s push to improve Snap’s performance is reviewed, including its public website and presentation, calls to divest the glasses division, improve monetization, and reduce stock-based compensation. The hosts note the limits imposed by Snap’s dual-class structure and founder control. Special situations and insider buying as a process (Priority: 3/5): Across the episode, the hosts stress that insider buying and special situations can take months or years to bear fruit. They use Globalstar as an example of a mosaic of catalysts—insider buying, reverse split, uplisting, and strategic interest—coming together over time.

Key Arguments: Globalstar’s Apple deal materially improved the company by funding network upgrades, paying down debt, and creating a guaranteed customer, which helped justify the earlier insider-buy thesis. Amazon’s interest in Globalstar likely reflects its broader push into satellite communications, but any acquisition is complicated by Apple’s 20% stake and Globalstar’s existing capacity commitments. Biotech M&A remains active because many drug assets are still in development, making CVRs a useful way to bridge valuation gaps and share clinical/regulatory risk. Centessa’s sleep-disorder program could threaten existing narcolepsy and idiopathic hypersomnia franchises if approved, but its mechanism differs from sodium oxybate-based drugs used by Jazz and Avidity. Unilever’s RMT with McCormick is designed to be tax-efficient and strategically refocus Unilever on higher-growth categories while monetizing its food assets. Snap’s activist case is compelling on paper, but dual-class control and high stock-based compensation make meaningful change difficult without management cooperation. The hosts view insider transactions and activist campaigns as useful idea-generation tools, but not always immediately actionable because catalysts often unfold slowly.

Data Points: Globalstar stock performance: Up over 300% in the last year - Cited as evidence that the Apple partnership and related catalysts transformed the company Globalstar stock move: Up 25% in the last week - Attributed to reports that Amazon was considering an acquisition Apple initial satellite partnership funding: $450 million - Apple’s 2022 commitment to support emergency messaging via Globalstar’s network Apple network capacity commitment: 85% - Globalstar agreed to allocate most of its network capacity to Apple services Apple expanded partnership investment: $1.5 billion - Apple’s 2024 expansion of the satellite partnership Apple constellation construction funding: $1.1 billion - Portion of Apple’s 2024 investment used to build the new satellite constellation Apple equity stake in SPV: 20% - Apple received a stake in a special purpose entity managing the constellation Debt paydown funding from Apple: $232 million - Additional Apple funding intended to help Globalstar reduce debt Globalstar satellites in orbit: 24 - Current satellite count discussed in the Amazon acquisition context Globalstar planned satellites: 32 by year-end - Expansion plan mentioned during the satellite industry discussion Amazon satellites in orbit: 180 - Used to compare Amazon’s progress with SpaceX/Starlink Amazon FCC deadline extension: 2 years - Amazon sought more time to meet launch obligations Amazon planned satellites: 1,600+ - FCC-related deployment target discussed on the podcast SpaceX active satellites: 10,000+ - Illustrates Starlink’s scale advantage Starlink users: 9 million+ - Used to show the commercial success of SpaceX’s satellite business Starlink revenue share: 50% to 80% of SpaceX revenue - Hosts cite satellite internet as a major driver of SpaceX economics Centessa deal value: More than $6 billion - Eli Lilly’s acquisition of Centessa Centessa premium: 40% - Premium to Centessa’s three-month average price Centessa cash consideration: $38 per share - Base cash payment in Lilly’s offer Centessa CVR potential: $9 per share - Maximum contingent value right payout tied to milestones Centessa closing price: $39.69 per share - Used to argue the market was pricing the CVR at less than $2 per share Centessa narcolepsy milestone CVR: $2 per share - Payable if Claminorextone is approved for narcolepsy type 2 before the fifth anniversary Centessa idiopathic hypersomnia milestone CVR: $5 per share - Payable if the drug is approved for idiopathic hypersomnia before the fifth anniversary Centessa broad approval milestone CVR: $2 per share - Payable if Claminorextone is approved for any indication before January 1, 2030 Unilever cash payment: $15.7 billion - One-time cash payment in the food-business transaction with McCormick Unilever ownership stake: 65% - Unilever’s stake in the combined company as described in the deal overview Combined company revenue: $20 billion annually - Expected scale of the Unilever/McCormick combination Expected cost savings: $600 million annually - Synergy target from the reverse Morris Trust transaction Unilever Foods valuation: $44.8 billion - Implied valuation based on the transaction terms Unilever Foods sales multiple: 3.6x - Implied valuation multiple from the deal Unilever Foods EBITDA multiple: 13.8x - Implied valuation multiple from the deal McCormick market cap: Just above $13 billion - Used to explain why the RMT structure is feasible Snap monthly active users: Over 1 billion - Central to Irenic’s activist thesis Snap stock move after letter: From about $4 to around $5, then $4.63 - Market reaction to Irenic’s campaign and subsequent pullback Snap stock-based compensation: Over $1 billion in 2025 - Highlighted as a major drag on profitability Snap annual loss: Over $400 million - Attributed in part to stock-based compensation Snap stock-based compensation in 2024: $1 billion - Shows persistence of the compensation issue Snap stock-based compensation in 2023: $1.3 billion - Illustrates the scale of dilution and expense over multiple years Reservoir Media activist stake: 9.2% - Irenic’s ownership in Reservoir Media, used as a comparison to Snap activism Reservoir Media proposal range: $10 to $11 per share - Irenic’s non-binding acquisition proposal for Reservoir Reservoir competing offer: $10.50 per share - Offer from parties tied to the CEO’s family Couchbase acquisition price: $24.50 per share in cash - Example of Irenic’s prior successful activism

Pivotal Quotes: "People have to be patient when they come across these situations." — Asif Surya: On insider buying and why special situations can take months or years to realize "I don't like CVRs like this." — Tamanna Surya: On the complexity of Centessa’s contingent value rights structure "Snap Back to Reality" — Asif Surya: Name of Irenic Capital’s presentation criticizing Snap and outlining turnaround steps

Implications: The episode suggests event-driven investors should focus on structure, catalysts, and timing, not just headlines. Satellite, biotech, and activist situations may offer upside, but outcomes depend on regulatory approvals, contract constraints, and governance power.