Inmarsat shares leap after approach by Apax/Warburg Pincus

Inmarsat's City Road, London, Headquarters.
Inmarsat’s City Road, London, Headquarters.

Inmarsat shares jumped more than 70p yesterday after a bid from an investor group led by buyout firms Apax and Warburg Pincus, and two Canadian pension funds – the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan Board.

The company said that it had received a non-binding offer from the consortium on January 31 to buy the company for $7.21 a share in cash, but only revealed the details after a leak on Wednesday.

Inmarsat said that “the proposal remains under discussions between the company and the consortium”, which it said also included two Canadian pension funds, CPPIB and the Ontario Teachers’ Pension Plan.

“There can be no certainty as to the terms on which any offer would be made. Nor is it certain that the discussions will lead to any firm offer for the company.”

This is the second time a bid approach has been made to Inmarsat.

Interest from the private equity group comes after US satellite company EchoStar ditched a takeover of its British rival last year.

Rumours that EchoStar was considering another approach for the company in recent weeks have flooded the London market in recent weeks and have been used by some analysts to explain a recent rally in Inmarsat shares.

Inmarsat’s share price has faltered recently. From a high of £11.37 in December 2016, it has fallen to a low of £3.62 in March 2018. More recently, the price has rallied somewhat on news that other companies might be interested.

Inmarsat recently delivered its 2018 results, showing good growth in revenue, with year-on-year increases of 5.3% and more than double inflight connectivity revenues.

Group Revenue (ex Ligado) for 2018 increased by $71.6m, or 5.7%, to $1,334.5m, including $26.6m increase in Q4.

Inflight connectivity (IFC) revenues more than doubled to $101.3m, including the first GX IFC airtime revenues.

Rupert Pearce, Chief Executive Officer, said then: “We remain focused on building and defending substantial market share in our target markets, supported by our diversified product portfolio and leading-edge networks. This will ensure we are able to fully capitalise on both the immediate and longer-term growth opportunities in these markets.

“Supported by a tightly controlled cost base and an infrastructure capital investment programme which we are confident will meaningfully and sustainably moderate from 2021, we expect to generate sustained free cash flow growth over the medium to long term.”

Under UK Takeover Panel rules, the consortium has until April 16 to make a formal offer.

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