Inmarsat rebuffs £3.2bn takeover proposal from US rival
But Echostar has not yet given up hope.
British satellite firm Inmarsat has rejected a second takeover approach from US rival Echostar worth £3.2 billion.
Echostar confirmed on Friday that it put forward a “new and improved proposal” earlier this week which offered shareholders 265p per share in cash and an exchange of 0.0777 Echostar stock for each Inmarsat share.
That offer is equivalent to 532p per Inmarsat share and would value the company at £2.45 billion.
Additional terms for convertible bond holders take the total value of the bid to £3.2 billion.
But that sweetened deal was rebuffed by Wednesday, nearly a month after Echostar’s initial approach was rejected.
In a statement, Inmarsat said it had “carefully” considered the offer but turned it down on the basis that it “very significantly undervalued Inmarsat and its standalone prospects”.
“The board remains highly confident in the independent strategy and prospects of Inmarsat,” the company said.
The terms of the first proposal have not been disclosed.
Inmarsat shares tumbled on the news, and were trading lower by more than 7% by midday.
Echostar has not yet given up hope, saying it “continues … to seek engagement with the board of Inmarsat on a constructive basis, with a view to agreeing the terms of a recommended transaction”.
The company is now seeking an extension of a deadline that requires it to table a firm proposal by 5pm on Friday July 6.
“EchoStar believes a combination of EchoStar and Inmarsat is strategically compelling,” its market statement said.
“The combined group would be one of the world’s leading satellite providers and be well-supported by a global portfolio of complementary assets and service offerings.
EchoStar believes a combination of EchoStar and Inmarsat is strategically compelling
“EchoStar believes that the improved proposal presents a compelling opportunity for Inmarsat’s shareholders to realise certain value from their investment in Inmarsat while also participating meaningfully in the upside potential of the combined company.”
Helal Miah, an investment research analyst at The Share Centre, said Echostar’s revised offer is “still on the low side” considering that Inmarsat is in the recovery process after a few tough years and is starting to see improved prospects on the horizon.
“Indeed, the offer price is lower than what the shares have been trading at recently after a potential second bidder emerged but then disappeared again.”
The US company dodged a takeover battle when European satellite operator Eutelsat Communications last week confirmed it would not make a rival offer for Inmarsat.
It came just days after Eutelsat said it was considering a possible bid.
Mr Miah added: “Should EchoStar fail to capture a deal now, which seems most likely, it will be barred for another six months and in that period a rival could once again emerge with a better offer.”