Amazon.com (AMZN +3.83%) is buying Globalstar (GSAT +9.63%) for $11.6 billion, as announced this morning.

In response to the news, Amazon stock is up 4%, Globalstar is up 9.3%… and Apple (AAPL 0.17%) stock is down 0.3%, all as of 2:40 p.m. ET.

What’s Apple got to do with this?

Globalstar is the satellite communications company that helps Apple provide direct-to-cell communications services via its iPhones and Apple Watches.

Investors in Apple may wonder whether it’s really a good idea for Apple to suddenly depend upon a $2.7 trillion tech giant (almost as much as Apple’s own $3.8 trillion market cap) providing its DTC service, rather than on a tiny $10 billion company, like Globalstar, that it could more easily push around. Amazon and especially Globalstar investors, on the other hand, seem ecstatic.

And no wonder!

Amazon

Today’s Change

(3.83%) $9.19

Current Price

$249.08

What this deal means for Globalstar and Amazon

Amazon is anteing up the equivalent of $90 a share for Globalstar, payable in cash or stock. The company is paying a 23% premium over what Globalstar shares were worth as recently as yesterday. And regulators permitting, this deal should close in 2027.

From Amazon’s perspective, the deal is also good news. For one thing, Amazon is acquiring Globalstar’s roughly two dozen satellites, instantly increasing the size of its own Amazon Leo satellite constellation by about 10%. For another, it’s inheriting Globalstar’s DTC capabilities for its network instantly, and without having to take the time and incur the expense of developing this technology on its own.

Does the deal instantly transform Amazon Leo into a viable competitor to SpaceX and Starlink? No. SpaceX’s satellite internet business is already profitable, and its Starlink fleet numbers more than 10,000 satellites.

But it’s a step in the right direction for Amazon.