Inmarsat prepares to leave stock market in $3.4bn private equity deal
Private equity firms have sealed a $3.4bn (£2.58bn) deal for UK satellite operator Inmarsat, sending its shares up seven per cent in early morning trading.
The agreement will see the successful bidders pay $7.21 (546p) per share for the firm, a premium on its Friday close price of 506.2p.
Read more: Inmarsat shares jump 16 per cent after buyout offer
Shares rose 8.6 per cent to 549.6p in morning trading, above the sale price.
The offer comprises $7.09 in cash for each share, as well as a previously announced $0.12 final dividend to be paid to shareholders on 30 May.
Buyers comprise Apax Partners, Warburg Pincus, Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan, working with lead adviser UBS as well as Credit Suisse, which acted as a joint adviser.
The transaction is believed to be the second largest public-to-private deal ever in the UK, concluding talks that started in the new year as Inmarsat felt the pressure of competition from a mix of old and new rivals.
Helal Miah, investment research analyst at The Share Centre, was surprised at the deal, given Inmarsat rebuffed a $3.25bn offer from Echo Star only last year.
“This becomes increasingly surprising now we have some of the key factors which held the business back, such as the maritime division, showing signs of abating, and very good prospects for its in-flight broadband service,” he said.
He added that this acquisition is one that the government may have intervened in following its promise to protect strategically important companies from overseas takeovers, after Softbank bought Arm in the aftermath of the EU referendum.
“Given how distracted we are with Brexit, could we actually be losing control of key companies rather than ‘taking back control’?” he asked.
Viasat is one of the traditional players competing with Inmarsat, while new competitors include One Web, backed by Richard Brandon, and Elon Musk’s Space X.
Inmarsat, advised by JP Morgan Cazenove, PJT Partners and Credit Suisse, said the terms of the acquisition are “fair and reasonable”.
Directors said they will “unanimously recommend” that shareholders vote in favour of the purchase.
The consortium, known as Triton Bidco, said Lansdowne Partners has committed to vote in favour of the deal, representing an 11.4 per cent stake in Inmarsat.
“Triton Bidco believes Inmarsat is well positioned for growth based on its unique global infrastructure, leading technological and capacity roadmap and strong spectrum holdings,” the consortium said.
“Inmarsat's business model is characterised by predictable revenues from a range of long-term contracts with governments and other financially secure customers.
Read more: Satellite firm Inmarsat boosts revenue due to in-flight broadband demand
“Triton Bidco also sees considerable potential for Inmarsat's in-flight connectivity business in commercial aviation and in seeking to maximise global IoT opportunities.”
The group said it will keep Inmarsat’s UK headquarters and maintain its R&D investment.