Yahoo Finance SES to Buy Intelsat in $3.1 Billion Bid to Rival Musk’s Starlink
(Bloomberg) -- SES SA has agreed to buy Intelsat SA for $3.1 billion in cash to create a satellite giant that will better compete with billionaire Elon Musk’s Starlink, after reviving talks that fell apart last year.
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The deal, which also includes contingent value rights, has been approved by both companies’ boards, the companies said in a statement on Tuesday, confirming an earlier Bloomberg News report. Closely held Intelsat’s investors, representing about 73% of common shares, have agreed to vote in favor of the deal, it said.
SES and Intelsat held discussions last year, though the talks collapsed after Intelsat failed to reach an agreement with SES and its major stakeholders on the future direction of the business. Luxembourg-based SES counts the small European nation’s government as its biggest shareholder.
SES’s depositary receipts fell 3.8% to €4.76 in Paris trading at 9:24 a.m. after dropping more than 10% yesterday following the Bloomberg report on the talks. The shares had declined 20% this year giving the company a market value of about €2.1 billion.
SES will finance the deal, which has an enterprise value of $5 billion, with existing cash and equivalents as well as new debt, including hybrid bonds, the company said. The combined company will be based in Luxembourg and will maintain a “significant presence in the US, notably in the greater Washington” area.
A deal between the two companies would follow other consolidation in the sector, prompted by the high capital outlays required to build satellites and send them to space. In 2021, California-based Viasat Inc. announced it would acquire Britain’s Inmarsat Group Holdings Ltd., and in July 2022 France’s Eutelsat SA agreed to combine with UK-backed low-earth orbit venture OneWeb Ltd.
What Bloomberg Intelligence Says:
SES’ agreed deal to acquire fellow geostationary earth orbit (GEO) satellite operator Intelsat for an enterprise value of $5 billion (about 5.5x trailing Ebitda) could bring significant cost synergies due to the overlapping nature of the businesses, yet will face big regulatory hurdles for the same reason — which explains the target of 2H25 for deal completion. SES could have used its financial flexibility to increase shareholder return or investment in new technologies.
— John Davies, BI telecoms and media analyst
Intelsat emerged from bankruptcy in 2022, cutting its $16 billion debt in half. The company was founded in 1964 as an intergovernmental consortium and broadcast the first moon walk, before being privatized in 2001. Private equity firms BC Partners and Silver Lake bought it in 2008.
(Updates with additional background starting in the fourth paragraph)
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