Inmarsat agrees take-private offer from Apax consortium

25th Mar 2019 08:21

(Sharecast News) - A consortium of funds led by Apax Partners has made a $3.4bn (£2.6bn) offer to take satellite communications provider Inmarsat private.The offer at $7.21 (546p) per share offer is structured as a scheme of arrangement and is comprised of a cash consideration of $7.09 plus the previously announced final dividend of $0.12 per share to be paid on 30 May.Inmarsat's directors intend to unanimously recommend that shareholders vote in favour of the deal and the consortium, which calls itself Triton BidCo and also includes Warburg Pincus funds, the Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan Board, has received shareholder support representing 11.4% of the FTSE 250 company's issued share capital.The court meeting and the general meeting are expected to be held before 31 May.Last week Inmarsat revealed that it had been in talks with the Triton consortium since January, while shares in the company had been sent higher by speculation that US rival EchoStar may soon renew its interest, after the London-listed company rejected two takeover offers last summer.Echostar's offer of 532p, comprising 265p in cash and 0.777 EchoStar shares would be worth 477p if made at the same level again."The market's attention will now turn to the question as to whether Echostar would have any competing interest," analysts at Olivetree Financial said, noting that the recent rumours of potential rekindled interest included speculation that Echostar might be have been in a "pens down" agreement with the UK Takeover Panel.Now that the move has been made, Echostar would be released from any 'pens down' commitment - and Olivetree said it was interesting to see the court and general meetings are scheduled "reasonably early in the timeline"."This perhaps, at the margin, suggests the PE consortium is shaping its tactics around the concept of there being potential third party interest. On the flip side, most industry watchers seemed somewhat cynical about the ability for Echostar to compete for this asset. There are no real synergies for a strategic buyer over a private equity one, and Echostar shares have been weak in recent months."Helal Miah, investment research analyst at the Share Centre, lamented another takeover of a UK high-tech firm."As one of the few large technology groups left in the UK and one that is of strategic and security importance, the government has previously mentioned that these businesses could be protected from overseas takeovers," Miah said. "This became an issue when ARM Holdings was taken over immediately after the EU referendum in 2016. But, given how distracted we are with Brexit, could we actually be losing control of key companies rather than 'taking back control'?"He added that the board's acceptance for the offer comes as a surprise as he believed Inmarsat would hold off given that this offer is only marginally higher than the previous one which at the time management felt undervalued the business."This becomes increasingly surprising now we have some of the key factors which held the business back, such as the Maritime division, showing signs of abating, and very good prospects for its In-Flight broadband service. However, some investors will welcome this news since the shares have been languishing until recent takeover speculation."