Yahoo Finance US bidder steps back from £2.45bn bid for Inmarsat
An American company has stepped back from launching a formal bid for the satellite company Inmarsat.
EchoStar, chaired by the Colorado-based entrepreneur and former professional poker player Charlie Ergen, had until 5pm on Friday to make an offer or walk away for six months from bidding for Inmarsat.
Just minutes before that deadline it said it would not proceed, after earlier announcing that Inmarsat had rejected its £2.45bn takeover approach. That announcement had knocked 10% off Inmarsat’s share price at the start of trading on Friday.
EchoStar first expressed an interest in the London-based Inmarsat on 8 June and had indicated earlier on Friday that it hoped the “put up or shut up” deadline might be extended.
Instead, it announced that “it does not intend to make an offer” for Inmarsat, which was set in 1979 by the International Maritime Organization (IMO) to enable ships to stay in contact with shore or to call for help in an emergency.
Inmarsat continues to monitor ships at sea but also installs wifi on planes and provides onboard safety systems, as well as providing satellite phones for communication in remote places. It was floated on the stock market in 2005.
EchoStar told the London stock market that it had made an offer earlier this week at 532p a share that had been rejected by Inmarsat.
Inmarsat’s shares traded as high as 1,115p in late 2015 but have fallen steadily since then, sparking speculation that it could become a takeover target. French company Eutelsat also expressed an interest but has since walked away.
In a statement to the London stock market just hours before that “put up or shut up” deadline, EchoStar said it was seeking an extension but urged Inmarsat’s board to approve the terms.
EchoStar had said the enlarged company would be “one of the world’s leading satellite providers and be well supported by a global portfolio of complementary assets and service offerings”.
It also said the offer was a “compelling opportunity” for Inmarsat’s shareholders. It had outlined that it was offering 265p in cash and 0.0777 EchoStar shares – valuing the equity at £2.45bn – while convertible bond holders (due in 2023) are being offered a value equivalent to $296,225. Taken together, this values the approach at £3.2bn, EchoStar had said.
After the bid was dropped, Inmarsat said: “The board remains highly confident in the independent strategy and prospects of Inmarsat given our track record, unique capabilities, differentiated market position and strong channels to market.”
The UK government could have become interested on national security grounds if a formal bid was tabled.
Inmarsat’s shares initially fell 10% after it was revealed it had rebuffed the offer, but by 11.30am in London they were down 6% at 494p. The shares had stopped trading for the day by the time EchoStar announced it was stepping back from a formal offer.
