Inmarsat has responded to media speculation about a takeover bid for the company by confirming that it has received a proposal to buy the business for approximately $3.3 billion, from a group headed by private equity firm Apax Partners. The deal is currently “under discussion.”
In a statement, Inmarsat confirmed that it had received a “non-binding proposal” from Apax Partners on 31 January 2019, representing a consortium also backed by the Canada Pension Plan Investment Board (CPPIB), Ontario Teachers’ Pension Plan Board (OTPP) and Warburg Pincus International.
The proposal concerned a possible cash offer of US$7.21 per share “for the entire issued, and to be issued, share capital of Inmarsat,” the statement said.
Inmarsat says that the proposal remains under discussion, and at this point there is no certainty that a firm offer will be made, or what the terms of any offer would finally be. A further announcement will be made in due course.
UK takeover rules require the consortium to express its firm intention to make an offer by close of business on 16 April, 2019, should it wish to do so, or to announce that it will not be making a bid.
Inmarsat has been the target of takeover speculation for some time, having rebuffed a bid from US company EchoStar in the summer of 2018 that valued the business at £3.2 billion – which equates to approximately $4.2 billion today.
However, this new Apax-fronted bid is cash-only, compared with the cash and equity deal planned by EchoStar, which also accounted for debt and EchoStar’s existing stake in the company. All told, the EchoStar proposal equated to approximately $7.07 per share, so less than the $7.21 currently proposed by Apax.
The UK-based satellite operator flatly rejected the EchoStar bid last year by saying that it was doing so “on the basis that it very significantly undervalued Inmarsat and its standalone prospects.”
Another intriguing aspect of this potential deal is Apax Partners’ own history in the satellite market. Apax has previously been a major shareholder in Inmarsat, having completed a takeover of the company in 2003 along with another venture capital firm called Permira, which eventually led to Inmarsat completing an Initial Public Offering in June 2005 and raising close to $650 million.
Following its exit from Inmarsat first time around, Apax then became a part owner of fellow satellite operator Intelsat, completing a takeover as part of another consortium of investors before exiting the business in 2008.
More recently, in 2016, funds managed by Apax Partners also completed the acquisition of the commercial satellite communication business operated by the Airbus Group – a business known today as Marlink. Apax had originally sold the satcom services company to Airbus in 2011 – at that time called Vizada – before buying back major parts of the business (minus any military communications services) five years later.
Apax Partners France remains the current owner of Marlink – which also happens to be one of Inmarsat’s largest customers.