Eutelsat has wasted no time moving forward with its proposed takeover of low earth orbit (LEO) satellite operator OneWeb, announcing that it has now signed a Memorandum of Understanding with key OneWeb shareholders to proceed with the proposed deal.
The MoU has been unanimously approved by each of Eutelsat’s and OneWeb’s boards of directors and is supported by both parties’ long-term investors. CMA CGM, a shareholder of Eutelsat, is also in favour of the move.
The transaction would see Eutelsat, which already owns approximately 23% of OneWeb, combine its 36-strong fleet of GEO (geostationary orbit) satellites with OneWeb’s constellation of 648 LEO satellites, of which 428 are currently in orbit.
OneWeb will still trade under its existing name and continue to operate the LEO business, with its headquarters remaining in the UK. Eutelsat will continue to be headquartered in France, listed on Euronext Paris, and will apply to trade on the London Stock Exchange subject to meeting applicable eligibility requirements and approvals.
The transaction would be structured as an exchange of OneWeb shares with new shares issued by Eutelsat, such that Eutelsat would own 100% of OneWeb (excluding the ‘special stake’ in the business held by the UK government).
OneWeb shareholders would receive 230 million newly issued Eutelsat shares, representing 50% of the enlarged share capital. In effect, Eutelsat would own half of the combined business, with OneWeb’s other current shareholders owning the other half.
Eutelsat first acquired an equity stake in OneWeb in April 2021 and strengthened the relationship with a global distribution agreement announced in March 2022. The firms have also newly announced an exclusive commercial partnership, addressing mainly the European and global cruise markets.
“Bringing together our two businesses will deliver a global first, combining LEO constellations and GEO assets to seize the significant growth opportunity in connectivity, and deliver to our customers solutions to their needs across an even wider range of applications,” said Dominique D’Hinnin, Eutelsat’s Chairman.
“This combination will accelerate the commercialisation of OneWeb’s fleet, while enhancing the attractiveness of Eutelsat’s growth profile. In addition, the combination carries significant value creation potential, anchored on a balanced mix of revenue, cost and capex synergies.”
“The strong support of strategic shareholders of both parties is a testament to the huge opportunity that this combination offers and the value that will be created for all its stakeholders. This is truly a game changer for our industry.”
Eutelsat says that it has developed a clear roadmap for future joint operations involving the two companies, with the aim of creating a complementary GEO/LEO service including a common platform, hybrid terminals and a fully mutualised network offering a one-stop shop for users.
The combined entity is projected to have revenues of approximately €1.2 billion in the 2022-23 financial year, with that figure forecasted to grow at a low double-digit compound annual rate over the next decade, the company said.
The Board of Directors of the combined group would consist of 15 members, including ten independent directors. Seven directors, in addition to the CEO of Eutelsat, would be proposed by Eutelsat and its key shareholders and seven directors would be proposed by OneWeb and its key shareholders. The number of directors proposed by each of the key shareholders will be linked to their shareholding in Eutelsat post transaction.
Dominique D’Hinnin will be proposed as Chairman of the combined entity, with OneWeb’s current Executive Chairman Sunil Bharti Mittal to become Co-Chairman (Vice-President). Eva Berneke, Eutelsat CEO, would continue as CEO of the combined entity.
The transaction is expected to close by the end of the first half of 2023.