Inmarsat rejects bid from US rival Echostar

SATELLITE communications company Inmarsat has rebuffed a takeover approach from rival Echostar, dismissing it as a lowball bid.

Inmarsat said the offer “very significantly undervalued the company and its stand-alone prospects” in a statement to the market after dealing ended on Friday. It added the board decided to reject what it called “a highly preliminary proposal”.

Rumours swirled around the market in dealings yesterday that Londonbased Inmarsat could be about to receive an offer, with shares in the company ending the day up 13.5pc at 473.9p, valuing the business at £2.2bn.

It is understood that Inmarsat sees Colorado-based Echostar’s offer as highly speculative. “Echostar has been sniffing around for a while,” said one source. “They’re sitting on $3bn in cash and need to do something with it or give it back to investors.”

Inmarsat’s shares have been heading downwards from a peak of almost £13 four years ago to a low of £3.34 in April.

The decline resulted in Inmarsat dropping out of the FTSE 100 two years ago. Further falls since then have made the company – which has been run by former City lawyer Rupert Pearce since 2012 – the focus of takeover speculation as its sector embarks on a process of consolidation.

New entrants to the market and new tech are creating an oversupply of capacity, meaning that analysts have been looking around to see which companies could be gobbled up. Inmarsat has been spending heavily over the past few years as it launches new satellites providing high-speed broadband connections from space, and there are also concerns that these traditional large satellites could be usurped.

The miniaturisation of electronics means that so-called small satellites – about the size of a washing machine – or “constellations” of even smaller cubesats could offer the same capabilities but at much lower costs. Other technologies such as solar-powered unmanned aircraft able to stay aloft for months could also be a threat, as they do not entail the costs of a space launch.

Inmarsat has been trying to fight back by developing in-flight passenger Wi-fi, and has 3,000 aircraft signed up.

Echostar did not reply to requests for comment.