Inmarsat’s board of directors has announced that it intends to “unanimously recommend” to shareholders that they accept a cash offer of approximately $3.4 billion to sell the business to a consortium led by Apax Partners, judging the bid to be a “fair and reasonable” price for the satellite business.
The deal has been agreed between Inmarsat and Triton Bidco – a newly formed joint venture company owned by a consortium including funds advised by Apax Partners, funds advised by Warburg Pincus, the Canada Pension Plan Investment Board (CPPIB), and the Ontario Teachers’ Pension Plan Board (OTPP) – based on an offer received in January 2019 that was reported in the media last week.
The agreement is for $7.21 in cash per Inmarsat share, a consideration of $7.09 for each share plus a final dividend of $0.12 per share to be paid on 30 May 2019, to shareholders on the register at the close of business on April 23rd.
“The Cash Value (of $7.21 per share) values the entire issued and to be issued ordinary share capital of Inmarsat at approximately $3.4 billion, which is equivalent to £2.6 billion based on the Announcement Exchange Rate,” the companies said, in a joint statement, with the price equating to 546p per share on the London Stock Exchange.
Unique characteristics
The Triton Bidco consortium explained that its purchase is based on the attractiveness of the satellite sector as an investment opportunity, with its “unique characteristics, including long lead times and the need for deep technical expertise.”
“Triton Bidco believes that integrated satellite operators with scale like Inmarsat are well positioned as network provision becomes more complex. While Inmarsat’s end markets, notably maritime and government, are competitive, 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 company said, in the deal announcement statement.
“In particular, Triton Bidco believes that Inmarsat’s business model is characterised by predictable revenues from a range of long-term contracts with governments and other financially secure customers. Triton Bidco also sees considerable potential for Inmarsat’s in-flight connectivity business in commercial aviation and in seeking to maximise global IoT opportunities.”
“Triton Bidco recognises Inmarsat is going through a multi-year investment cycle to capitalise on its growth opportunities, with utilisation and returns difficult to predict. However, Triton Bidco intends to leverage the experience of its shareholders as investors in the satellite sector and broader telecommunications space to assist Inmarsat during this critical phase in its business development. This will allow Inmarsat to focus on the effective management of its business and delivering on its potential during its current investment phase.”
HQ and GMDSS
The statement stressed that the new owners would continue to ensure that Inmarsat will “comply in full with the obligations under the Public Services Agreement with IMSO in respect of the provision of the Global Maritime Distress and Safety System” and that they would also maintain Inmarsat’s headquarters in the UK.
Completion of the takeover is subject to the clearance from competition authorities in a number of countries, but all going well the acquisition is currently expected to become effective during the fourth quarter of 2019, the companies said.
“Inmarsat is a business which continues to grow as we invest in our infrastructure to support our customers’ requirements. Increasingly, these requirements are for higher performance broadband connectivity,” said Andrew Sukawaty, non-executive Chairman of Inmarsat.
“The expertise and skills of our employees, together with continued investment in our technology and infrastructure, are integral to delivering on our growth potential. We are pleased that the Consortium recognises this and that we are able to present this offer to shareholders.”
