Intelsat and OneWeb have entered into a “definitive combination agreement” that will see the pair merge in a share-for-share transaction.
Intelsat and SoftBank have also entered into a share purchase agreement that will see SoftBank invest $1.7 billion in newly issued common and preferred shares of the combined company.
The companies say both the merger and the SoftBank investment are subject to, among other conditions, successful completion of debt exchange offers to certain existing Intelsat bondholders as well as receipt of certain regulatory approvals.
The plan is that the strengths of Intelsat and OneWeb, combined with the investment by SoftBank, will the companies satisfy the explosion in demand for broadband connectivity for people and devices everywhere.
Intelsat and OneWeb
Stephen Spengler, Chief Executive Officer of Intelsat, said: “We believe that combining Intelsat with OneWeb will create an industry leader unique in its ability to provide affordable broadband anywhere in the world.
“As an early equity investor in OneWeb, we recognized a network that was a complement to our next-generation Intelsat EpicNG fleet and a fit with our long-term strategy.
“By merging OneWeb’s LEO satellite constellation and innovative technology with our global scale, terrestrial infrastructure and GEO satellite network, we will create advanced solutions that address the need for ubiquitous broadband.
“The transaction, including SoftBank’s investment, will significantly strengthen Intelsat’s capital structure and accelerate our ability to unlock new applications, such as connected vehicles, as well as advanced services for our existing customers in the enterprise, wireless infrastructure, mobility, media and government sectors, while also reducing execution and other risks.”
Greg Wyler, Founder and Executive Chairman of OneWeb, said: “OneWeb has made incredible technical progress over the past year, and has itself attracted significant investment from SoftBank.
“With SoftBank’s support we will build the world’s first truly global broadband company, accelerating our mission of bridging the digital divide by connecting the four billion people without access today.
“While there are numerous growth paths available to OneWeb, we are very excited at the prospect of working with Intelsat on this shared objective.”
In December 2016, SoftBank announced its commitment to invest $1 billion in OneWeb to support the technological development and the construction of the world’s first and only high volume satellite production facility to further accelerate OneWeb’s vision of delivering affordable, high-speed, low latency internet to rural and remote communities around the world.
Intelsat was a founding investor in OneWeb, making a minority equity investment in 2015.
The combined company will remain domiciled in Luxembourg, and continue to be listed on the New York Stock Exchange. The combined company, through its subsidiaries, expects to maintain a significant presence in the United States, including at OneWeb’s new manufacturing facility in Exploration Park, Florida, and at Intelsat’s United States facilities in McLean, Virginia.
Intelsat’s CEO, Stephen Spengler, will be the CEO of the combined company. OneWeb’s Founder and Executive Chairman, Greg Wyler, will be the Executive Chairman of the combined company’s Board of Directors.
The transaction is expected to close late in the third quarter of 2017.
Yesterday, Intelsat announced its financial results for the three months and full-year ended December 31, 2016.
Intelsat reported total revenue of $550.7 million and net income attributable to Intelsat S.A. of $662.8 million for the three months ended December 31, 2016.
Spengler said: “In 2017, maintaining our momentum is one of our top objectives, whether on growth opportunities, the remaining Intelsat EpicNG satellite launches, implementing our managed services, or operationalising production units of new ground technologies, such as electronically steerable antennas, in which we have invested.
“Additionally, our proposed merger with OneWeb aligns with our strategic objectives and will create the world’s first global broadband provider. We believe the complementary OneWeb technology, and the $1.7 billion investment by SoftBank, will create a company with greater growth opportunities and a strong financial foundation.
“Importantly, we will be more strongly positioned to achieve our shared mission to unlock new applications for satellite-based solutions, connecting people and devices everywhere.”