Inmarsat acquired by private equity consortium for $3.4bn

Britain’s satellite communications business Inmarsat has reached an agreement to be acquired by a group of investors in a deal that values its equity at $3.4 billion.

Inmarsat was known to be in talks with Triton Bidco, a joint venture comprising funds managed by Apax Partners and Warburg Pincus alongside the Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board.

In partnership with the European Space Agency (ESA), the Iris air traffic management programme is being developed to deliver powerful benefits to airlines and air navigation service providers across Europe by enabling high bandwidth, cost effective satellite-based datalink communications. This allows aircraft to be pinpointed in four dimensions, known as four dimensional (4D) operations, which include latitude, longitude, altitude and time. Earlier this month, European aviations chiefs announced that Inmarsat’s research phase had successfully concluded and work on commercial implementation has now commenced.

Triton Bidco said Inmarsat’s business model is “characterised by predictable revenues from a range of long-term contracts with governments and other financially secure customers”, with opportunities in inflight connectivity and IoT highlighted. But it also noted that the company is going through a multi-year investment cycle to capitalise on growth opportunities, with returns difficult to predict.

The bidder said it will “leverage the experience of its shareholders as investors in the satellite sector and broader telecommunications space to assist Inmarsat during this critical phase in its business development”. This will allow the satcoms player to focus on the effective management of the business and delivering on its potential during the current investment phase.

Triton Bidco also pledged to maintain Inmarsat’s headquarters in the UK and maintain a level of R&D spend consistent with past practice.

Shareholders are being offered $7.21 per share in cash, made up of a $7.09 payment and a $0.12 per share dividend – a 35 per cent premium on the volume-weighted average price of $4.04 in the three months to 18 March 2019.

Inmarsat said its directors intend to “unanimously recommend” the scheme, and will be supporting it with their own holdings. Triton Bidco received support from the owners of around 11.4 per cent of Inmarsat’s share capital at close of play on 22 March 2019.

Completion of the deal is subject to regulatory approvals in a number of markets.