19 Mar 19. The FT reported yesterday that Inmarsat is in $3.3bn takeover talks with private equity-led group. Interest in UK satellite company comes after EchoStar of US ditched takeover attempt Inmarsat has become attractive to buyout groups because the share price has reached historic lows.
Inmarsat, the British satellite communications group, is considering a $3.3bn takeover bid from an investor group led by buyout firms Apax and Warburg Pincus, in a deal that would return it to private equity control. The approach comes as Inmarsat has been struggling to appeal to investors after a period of poor performance that has sent its shares to near-record lows for much of the past year. The London-based company said that it had received a non-binding offer from the consortium on January 31 to buy the company for $7.21 a share in cash, but only revealed the details after a leak on Wednesday. Inmarsat said that “the proposal remains under discussions between the company and the consortium”, which it said also included two Canadian pension funds, CPPIB and the Ontario Teachers’ Pension Plan. Inmarsat added: “There can be no certainty as to the terms on which any offer would be made. Nor is it certain that the discussions will lead to any firm offer for the company.” The offer equates to a 28.9 per cent premium to Inmarsat’s undisturbed US-listed share price of $5.59 before news of the group’s interest leaked on Wednesday. It climbed to $7.05, giving it a market value of $3.3bn.
Interest from the private equity group comes after US satellite company EchoStar ditched a takeover of its British rival last year. Rumours that EchoStar was considering another approach for the company in recent weeks have flooded the London market in recent weeks and have been used by some analysts to explain a recent rally in Inmarsat shares. Shares in the satellite company, based in London’s Old Street roundabout, have suffered in recent years crashing at regular intervals due to its uncertain outlook, its struggle to convert older users of traditional satellite phones to faster broadband services and high capital expenditure. The business has become attractive to buyout groups after its sluggish performance and troubles have knocked shares close to their historic lows in recent months. Inmarsat has been in private equity ownership before. Apax and Permira bought a majority stake in 2003 before floating it in 2005. It has also been regularly tipped as a consolidation target with EchoStar and SoftBank, which has backed OneWeb and tried to buy Intelsat, linked to the British company. Under UK Takeover Panel rules, the consortium has until April 16 to make a formal offer. The disclosure came after the blog site Betaville suggested Apax and Warburg Pincus were considering an approach for Inmarsat. The company’s shares are commonly quoted by its listing on the London market, but the offer was made in dollar terms because that is the currency it reports in. A sterling offer would also expose shareholders to exchange rate volatility as the UK’s discussions on leaving the European Union reach a climax, one person close to the situation said.