Inmarsat opts for Apax, Permira

The UK-based private equity consortium has won the race to acquire the global satellite operator, beating off competition from Apollo Management and Soros Private Equity.

After negotiations spanning almost 18 months, shareholders have finally recommended a $15 per share offer from Apax Partners and Permira for Inmarsat Ventures, the global satellite operator, in a deal which values the business at more than $1.5bn.

 

Bidding via acquisition vehicle Grapeclose, Apax and Permira have teamed up with management, led by CEO Michael Storey and Ramin Khadem, chief financial officer. The offer was chosen ahead of a rival offer from private equity groups Apollo Management and Soros Private Equity. The offer has been approved by Deutsche Telekom, Telenor and Xantic, representing just over 25 per cent of the company’s issued share capital.

 

Inmarsat has been the subject of bid interest for almost a year and a half after in May 2002 plans for an initial public offering of the business had been shelved. Many of the company’s shareholders, including France Telecom, had indicated that they were keen to offload their interest in the business, alerting a number of private equity firms to the opportunity to bid.

 

Last month, Inmarsat’s independent directors entered a short period of exclusive negotiations with Apax Partners and Permira. This ended on October 7 and was followed by a period of negotiations with both syndicates. Apollo and Soros were thought to have offered around $15 per share as well, but Apax and Permira had the benefit of management support.

 

Inmarsat, an abbreviation of International Mobile Satellite, is a provider of global mobile satellite communications services. Its services include voice, fax, intranet and internet access and other data services used by multinational corporations, government agencies, media and international aid organisations and other enterprise level users in the maritime, land and aeronautical sectors.

 

Inmarsat’s origins date back to 1979 with the foundation of an intergovernmental organisation under the Convention on the International Maritime Satellite Organisation. Inmarsat’s total revenues in 2002 rose five per cent to $463m.

 

“We believe the cash offer from Grapeclose of $15 per share is attractive and represents good value for our shareholders,” said Richard Vos, chairman of Inmarsat Ventures. “Grapeclose is committed to the continuing investment in our new satellite programme that will allow us to provide an even higher speed global broadband service.”

 

The debt financing for the transaction has been jointly arranged and underwritten by Barclays Capital, Credit Suisse First Boston and The Royal Bank of Scotland.

 

Inmarsat was advised on the sale process by Morgan Stanley and Travers Smith Braithwaite. Grapeclose was advised on the transaction by Credit Suisse First Boston.

 

“Inmarsat benefits from a substantial global business with a long heritage, a powerful distribution network, and the prospects of growth driven by data services,” said Richard Wilson, who led the deal for Apax.

 

The sector has been the subject of private equity interest for some time, with financial buyers attracted by the steady cashflows generated from the global satellite market. Earlier this year, French private equity house Eurazeo acquired France Telecom's 23 per cent stake in European satellite operator Eutelsat for just under E450m.

 

In December 2002, 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. 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.