Inmarsat reached an agreement to be acquired by a group of investors, with a deal that values the satellite communications company’s equity at $3.4 billion.
It was confirmed last week that Inmarsat was in talks with Triton Bidco, a joint venture comprising funds managed by Apax Partners and Warburg Pincus alongside the Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board. While it was cautioned that this may not come to fruition, in fact it took a matter of days for the deal to be agreed.
Triton Bidco said Inmarsat’s business model is “characterised by predictable revenues from a range of long-term contracts with governments and other financially secure customers”, with opportunities in in-flight connectivity and IoT highlighted. But it also noted that the company is going through a multi-year investment cycle to capitalise on growth opportunities, with returns difficult to predict.
The bidder said it will “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 the satcoms player to focus on the effective management of the business and delivering on its potential during the current investment phase.
Triton Bidco also pledged to maintain Inmarsat’s headquarters in the UK and maintain a level of R&D spend consistent with past practice.
The deal
Shareholders are being offered $7.21 per share in cash, made up of a $7.09 payment and a $0.12 per share dividend. This is a 35 per cent premium on the volume-weighted average price of $4.04 in the three months to 18 March 2019.
Inmarsat said its directors intend to “unanimously recommend” the scheme, and will be supporting it with their own holdings. Triton Bidco received support from the owners of around 11.4 per cent of Inmarsat’s share capital at close of play on 22 March 2019.
Completion of the deal is subject to regulatory approvals in a number of markets.
Inmarsat has been the subject of interest for a number of months. In addition to Triton Bidco, which began talks early this year, in 2018 EchoStar dropped an informal $3.2 billion bid, which was said to undervalue Inmarsat.
