Intelsat SA and SES SA have ended talks on a merger that would have created a satellite giant to help fend off growing competition.
(Bloomberg) — Intelsat SA and SES SA have ended talks on a merger that would have created a satellite giant to help fend off growing competition.
Discussions on a potential combination have ceased, SES said in a statement Thursday, confirming an earlier Bloomberg News report. It didn’t provide further details. A transaction could have valued the combined business at more than $10 billion including debt, Bloomberg News reported in March.
Intelsat wasn’t able to reach an agreement with SES and its major stakeholders on the future direction of the business, people with knowledge of the matter said earlier.
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.
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 ($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.
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