Intelsat SA has ended negotiations to combine with SES SA, people familiar with the matter said, a combination that would have created a satellite giant to help fend off growing competition.
(Bloomberg) — Intelsat SA has ended negotiations to combine with SES SA, people familiar with the matter said, a combination that would have created a satellite giant to help fend off growing competition.
Intelsat wasn’t able to reach an agreement with SES and its major stakeholders, according to the people, who asked not to be identified because the information is private. A transaction could have valued the combined business at more than $10 billion, including debt, Bloomberg News reported in March.
The deal would have helped the two operators compete in an increasingly crowded market. Billionaires Elon Musk and Jeff Bezos are launching thousands of the spacecraft into lower orbits to help blanket the ground below with internet access.
“Intelsat engages in strategic conversations with potential partners on a regular basis, and we do not publicly comment on the content or outcome of those discussions,” Intelsat said in an emailed statement. A representative for SES couldn’t immediately be reached for comment outside regular business hours.
Intelsat’s $3 billion 6.5% bond due 2023 declined more than 3.75 cents on the dollar to 91 cents after Bloomberg reported that talks had ended, according to Trace bond price data.
SES, which has a market value of 2.2 billion euros ($2.4 billion), had disclosed talks about a possible combination with Intelsat in March. The two companies control about 40% of the fixed satellite services market, according to a previous estimate from Goldman Sachs Group Inc.
Depositary receipts of SES have fallen 20% this year in Paris trading. The Luxembourg government is SES’s biggest shareholder and was seen as key to securing a deal.
Steve Collar, SES’s chief executive officer, has previously called space “essentially a fixed-cost industry” that can see enormous financial benefits from consolidation. The company announced earlier this month that Collar would be stepping down at the end of June. Ruy Pinto, chief technology officer, will assume the CEO job until a permanent successor is named.
Intelsat emerged from bankruptcy last year, cutting its $16 billion debt in half. The company was founded in 1964 as an intergovernmental consortium and broadcast the first moon walk, before being privatized in 2001. Private equity firms BC Partners and Silver Lake bought it in 2008.
–With assistance from Liana Baker.
(Updates with bond information in fifth paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.