Inmarsat takes off after confirming private equity talks

Satellite communications group Inmarsat confirmed on Tuesday evening that it was in talks with a consortium of private equity companies after receiving a $3.3bn proposal to buy the company out in January.

The proposal from Apax Partners, Warburg Pincus International, and Canada Pension Plan Investment Board was about a possible cash offer of $7.21 per Inmarsat share, assuming no further dividends would be paid by Inmarsat following the date of the proposal.

Inmarsat said discussions were continuing with the consortium, now expanded to also include the Ontario Teachers' Pension Plan Board, which has until 16 April to make a firm offer.

Apax Partners, which used to own Inmarsat, owns satellite communication provider Marlink, which has a marine contract with Inmarsat.

There is no certainty over the terms on which any offer would be made, the company stressed, nor is it certain that the discussions will lead to any firm offer.

Shares in Inmarsat surged last month on reports of that US rival EchoStar may soon renew its interest, after the London-listed company rejected two takeover offers last summer.

The consortium's mooted offer was a 23% premium to the UK close of 437.8p on Tuesday night, sending the stock up 16% to 509p in early trading on Wednesday morning.

Analysts at Exane said they think Inmarsat's management "is likely to favour a takeprivate bid (vs. a take-over scenario) especially if it comes with the strategic benefit of closer integration with Marlink".

Those at Jefferies said Inmarsat decision to disclose the consortium's six-week-old non-binding cash bid, almost identical in value to Echostar's rejected bid, "feels like a well-advised 'stalking horse' that could well now result in a revised bid (from either suitor)".