National security concerns have forced Global Eagle Entertainment, an in-flight Wi-Fi service provider, to cancel a $416 million investment agreement with Beijing Shareco Technologies to create a joint venture for the Chinese market.
Marina del Rey-based Global Eagle announced the development in a Securities and Exchange Commission filing last week.
The deal with the China-based company was first announced in November, but the Committee on Foreign Investment in the United States refused to give it a green light in April. The committee did not disclose its reasoning for rejecting the deal.
Beijing Shareco, owned by Chinese conglomerate HNA Group, planned to obtain a roughly 36 percent ownership stake in Global Eagle and a 51 percent stake in the joint venture through the investment.
Global Eagle had pledged to invest $150 million in the joint venture, a vehicle through which the company would have become the exclusive provider of in-flight Wi-Fi and entertainment to HNA’s various airlines, which have about 320 aircraft.
National security analysts have suggested foreign governments could spy on business passengers’ computers using in-flight Wi-Fi systems.
Global Eagle’s share price fell about 11 percent to $2.98 at the close of trading on July 26 after the news.
– Garrett Reim
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