Eutelsat in U-turn over possible takeover bid for Inmarsat

Eutelsat in U-turn over possible takeover bid for Inmarsat

Eutelsat has done an abrupt U-turn on its announcement of a potential bid for Inmarsat – by saying this morning that it was not going to bid.

Yesterday, following rumours in the market, Eutelsat issued a statement confirming “that it is currently evaluating a possible offer for Inmarsat”. But it warned: “There can be no certainty any offer will be made, nor as to the terms of any offer.”

The news followed just a month after London-based Inmarsat rejected a bid from EchoStar of the US, which is already a shareholder.

Paris-based Eutelsat said this morning “that it does not intend to make an offer for Inmarsat”. But there were plenty of buts, hinting that it might come back if circumstances changed.

It set out four conditions, any one of which might allow it to trigger a move on Inmarsat. The first is “with the consent of the board of Inmarsat”, implying that perhaps this is the first move in potential talks that could lead to a cordial merger of the two companies.

The second condition – clearly aimed directly at EchoStar – was “if a third party (including another publicly identified potential offeror) announces a firm intention to make an offer for Inmarsat”.

The other two conditions cover the possibility of a reverse takeover or “a material change of circumstances”, undefined but something that would have to be approved by the UK Panel on Takeovers and Mergers.

The impression is that this is Eutelsat marking its position that, if EchoStar or anyone else wants to bid for Inmarsat, they will face a bidding war. Europe’s satellite industry is entering a period of likely consolidation.

Inmarsat’s market cap this morning was £2.64 billion (€2.99 billion), after its shares fell following Eutelsat’s decision not to bid. Eutelsat’s market cap is €3.93 billion.

Eutelsat got its net debt down in the 2016-17 fiscal year by €366 million to €3.64 billion. Inmarsat’s net debt is €2.1 billion.

People from Eutelsat and Inmarsat are not commenting.

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