French private equity house Eurazeo has become the latest European equity sponsor to enter the satellite market, taking France Telecom's 23 per cent stake in European satellite operator Eutelsat for just under E450m.
The transaction brings to an end the protracted talks between the two companies, which were halted last year when the two failed to agree a price, thought to be around E400m.
The transaction values France Telecom’s stake at E447m, and Eutelsat’s equity at E1.93bn. France Telecom will reinvest a maximum of E74m for a 20 per cent stake in the holding company created to acquire Eutelsat. The net proceeds of the transaction for France Telecom will total E375m and will be used to reduce the group’s debt.
France Telecom has also agreed to maintain contracts with Eutelsat, which reported net income of $298m on revenue of $646m in 2000.
In December, Italian private equity firm Investindustrial, formerly 21 Invest, teamed up with publishing group De Agostini to acquire a 10.9 per cent stake in Eutelsat from Deutsche Telekom for E210m, based on a valuation very close to the one applied to Eurazeo’s investment. Also last year, a company majority-controlled by Lehman Brothers’ private equity division acquired Telecom Italia’s 20.5 per cent stake in the Eutelsat for $480m.
The deal comes at a time when Eurazeo is preparing to launch a new fund targeting the growing French buyout market. Eurazeo chief executive Patrick Sayer said the firm would hope to raise around E600m from third party investors, with a further E300m to be provided by Lazard.
UK telecom group BT is also thought to be planning to sell its 17 per cent stake in the company. Eutelsat’s other shareholders include many of Europe’s incumbent telecom operators, including, Belgacom, KPN, Russian Satellite Communications Company and Telekom Polska.