SoftBank reaches for stars with $18bn OneWeb, Intelsat merger

The Japanese technology investor SoftBank (Swiss: SOFB.SW - news) is hatching plans for a multi-billion dollar merger of two major satellite companies - OneWeb and Intelsat - in a deal that would create a global powerhouse in the fast-changing arena of space technology.

Sky News has learnt that discussions involving a combination of OneWeb - shareholders in which include Airbus, The Coca-Cola Company (Xetra: 850663 - news) and Virgin Group - and Intelsat are at an advanced stage.

Intelsat is also a small shareholder in OneWeb.

One source indicated that a deal could be outlined when Intelsat, which is listed in New York, reports financial results on Tuesday.

If the talks are successfully concluded, an announcement would come just two months after SoftBank invested $1bn in OneWeb, a move designed to help it build the world's first high-volume satellite production facility in Florida.

Sources said SoftBank, which last year acquired the UK's biggest home-grown technology company, ARM Holdings (LSE: ARM.L - news) , would also commit to paying down some of Intelsat's huge debt-pile as part of the transaction.

It could invest several billion dollars through an offer to Intelsat's debt-holders, according to one source.

The deal is understood to be conditional on Intelsat's bondholders accepting an offer at a slight premium to where the bonds were trading on Monday.

OneWeb was valued at $2.5bn in its most recent fundraising, while Intelsat, shares in which have a market value of roughly $550m, carries about $15bn of debt.

In total, the new business, which effectively gives OneWeb a stock market listing, would have an enterprise value of about $18bn.

Greg Wyler, OneWeb's founder, is expected to become executive chairman of the company, while Stephen Spengler, Intelsat's chief executive, will continue in that role, according to bankers.

OneWeb was conceived by a group of technology investors and entrepreneurs as an attempt to extend internet access to rural areas and developing countries around the world.

Intelsat, which is headquartered in Luxembourg, is the world's largest satellite services business, and provides commercial satellite capacity to the US government and a number of military organisations.

SoftBank's involvement in the deal underlines its status as a power-broker in the technology industry, and follows its recent decision to raise a $100bn fund - the largest pool of capital dedicated to technology in the world.

Announcing its investment in OneWeb in December, Masayoshi Son, SoftBank's chairman and chief executive, said:

"OneWeb is a tremendously exciting company poised to transform internet access around the world from their manufacturing facility in Florida.

"Earlier this month I met with President-Elect Trump and shared my commitment to investing and creating jobs in the US.

"America has always been at the forefront of innovation and technological development and we are thrilled to be playing a part in continuing to drive that growth as we work to create a truly globally connected ecosystem."

Mr Wyler said at the time: "We look forward to working together as we execute on our mission to build a global knowledge infrastructure that provides affordable broadband to the over four billion people across the globe without internet access."

An Intelsat spokeswoman said the company did not comment on rumours or speculation about it, while OneWeb and Softbank were unavailable for comment.