SES SA is in advanced talks to combine with rival Intelsat SA to create a European satellite giant that can better compete with billionaire Elon Musk, people familiar with the matter said.
(Bloomberg) — SES SA is in advanced talks to combine with rival Intelsat SA to create a European satellite giant that can better compete with billionaire Elon Musk, people familiar with the matter said.
Luxembourg-based SES is aiming to reach an agreement with Intelsat as soon as the next few weeks, the people said, asking not to be identified because the deliberations are private. A transaction could value the combined business at more than $10 billion including debt, according to the people.
SES’s fiduciary depositary receipts have fallen 32% in Paris trading over the past 12 months, giving the company a market value of about €2.6 billion ($2.7 billion).
A combination would help SES bulk up at a time when it’s facing fresh competition. Plans by Musk and fellow tycoon Jeff Bezos to launch thousands of spacecraft into lower orbits and blanket the earth in fast broadband have pushed the traditional satellite industry into mergers.
Any deal would need the blessing of the Luxembourg government, which is SES’s largest shareholder. Negotiations are ongoing, and there’s no certainty they will result in a deal, the people said. Representatives for SES and Intelsat didn’t immediately respond to requests for comment.
California-based Viasat Inc. agreed in 2021 to buy Britain’s Inmarsat Group for about $4 billion in cash and shares, while France’s Eutelsat Communications SA is acquiring OneWeb Ltd. in a $3.4 billion all-stock deal.
Intelsat emerged from bankruptcy in February last year, cutting its $16 billion debt pile in half. The company was founded in 1964 as an intergovernmental consortium and broadcast the first moon walk, before being privatized in 2001. It was acquired by private equity firms BC Partners and Silver Lake in 2008.
Read More: Intelsat Overcomes Numerous Objections to Secure Bankruptcy Plan
SES, which has its headquarters in a Luxembourg castle, beams video for broadcasters including Sky TV. It also provides broadband for clients who are remote from traditional internet service, such as cruise ships and planes.
Steve Collar, the chief executive officer of SES, has previously called space “essentially a fixed-cost industry” that can see enormous financial benefits from consolidation. The company worked with an adviser to explore a takeover of Inmarsat in 2021, people familiar with the matter have said.
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