Oman Daily Observer

US satellite group Echostar drops $3.2bn bid for British rival Inmarsat

-

LONDON: US satellite group Echostar dropped a $3.2 billion takeover approach for Inmarsat after failing with a late attempt to persuade the British company into talks.

Echostar, which is chaired by billionair­e entreprene­ur Charlie Ergen, said it would not table a formal offer for the UK satellite operator after the FTSE 250 company rejected a 532-pence-a-share cash and shares bid that valued its equity at about £2.45 billion ($3.25 billion)

The announceme­nt came less than half an hour before a 1700 London time (1600 GMT) deadline for Echostar to either make a firm offer for Inmarsat or walk away.

“The board remains highly confident in the independen­t strategy and prospects of Inmarsat, given our track record, unique capabiliti­es, differenti­ated market position and strong channels to market,” the British company said in response to Echostar’s withdrawal.

The UK’S Takeover Panel, which regulates merger and acquisitio­n activity in Britain, had fixed a deadline for Echostar after Inmarsat announced last month it had spurned a takeover approach from its US rival at an undisclose­d price.

With the deadline just hours away, Echostar, whose founder Ergen was once a profession­al gambler, ramped up the pressure on Inmarsat by revealing on Friday morning it had made a second informal bid in private on July 3.

Inmarsat’s board had rejected the 532 pence-a-share approach the next day, Echostar said. Including Inmarsat’s convertibl­e bonds, the proposal had valued the group as a whole at £3.2 billion.

But while Echostar publicly urged the London-based business to seek a deadline extension from the panel so the two sides could reach a deal based on the latest bid, the UK group responded later on Friday morning by arguing the proposal “very significan­tly undervalue­d Inmarsat and its standalone prospects.”

Echostar’s subsequent decision to withdraw sent Inmarsat’s shares down 8 per cent to close at 483.8 pence amid disappoint­ment from some traders who had anticipate­d a bidding war for Inmarsat. The announceme­nt last month of Echostar’s original approach had sent Inmarsat’s shares surging.

However, despite expectatio­ns of a counterbid, another suitor did not make an approach to rival Echostar. While France’s Eutelsat Communicat­ions had said on June 25 it was considerin­g an offer for Inmarsat, it swiftly ruled itself out less than 24 hours later, after its shares fell on news of its possible bid.

Analysts had speculated that Inmarsat was especially attractive to Echostar because the British firm’s US spectrum looked particular­ly complement­ary to the frequencie­s owned by Echostar’s sister company Dish Network Corp, the US satellite television group also chaired by Ergen.

But analysts agreed with Inmarsat’s board, which is led by chairman Andrew Sukawaty, that Echostar’s second bid was not high enough.

Wilton Fry, of RBC Capital Markets, described the proposal as “low ball” and estimated Echostar could potentiall­y get £10-a-share of spectrum value from Inmarsat. Berenberg also said the US company appeared to be trying to buy Inmarsat “on the cheap”.

Echostar’s shares rose 1.9 per cent after its withdrawal.

 ?? — Reuters ?? Technician­s look at a solar panel on the Inmarsat S-band/hellas-sat 3 satellite in a clean room facility of the Thales Alenia Space plant in Cannes, France.
— Reuters Technician­s look at a solar panel on the Inmarsat S-band/hellas-sat 3 satellite in a clean room facility of the Thales Alenia Space plant in Cannes, France.

Newspapers in English

Newspapers from Oman