Inmarsat takeover bid confirmed

(July 25 2008)

What a week to be a stock market trader – on Monday, US investment company Harbinger called a halt to takeover talks with Inmarsat, causing shares in the satellite operator to dip 9 per cent. However, this morning has seen a swift change of heart, with Harbinger making a statement to the London Stock Exchange stating its intention to make an offer.

Talks between the two companies concerning a possible takeover were initially confirmed on July 7th, which caused ripples in the market and pushed Inmarsat’s share price up 12 per cent.

This proved a false dawn however, when only two weeks later the talks were officially halted, causing the stock to slide back.

With Harbinger now finally confirming that an offer will be made, details about its plans for Inmarsat following a takeover are starting to emerge.

Harbinger currently owns 48.43 per cent of SkyTerra, a US satellite network company that has already been involved in cooperative agreements with Inmarsat in the past.

It appears that Harbinger intends to utilise the combined capabilities of these two satellite companies, including SkyTerra subsidiary Mobile Satellite Ventures (MSV), to offer a new range of services in North America.

“With its global satellite fleet and complementary plans for next generation satellites, Inmarsat offers a compelling strategic fit with SkyTerra, and its subsidiary MSV,” said the company in a statement.

"MSV, together with MSV Canada, is developing an integrated satellite-terrestrial communications network to provide seamless, transparent and ubiquitous wireless coverage of the United States and Canada to consumer handsets."

“In an effort to realise additional value embedded in the combination of both companies' radio spectrum, MSV and Inmarsat recently signed a cooperation agreement for L-Band operations in North America.”

“The proposed (takeover) offer would allow MSV and Inmarsat to increase substantially the scope of their existing cooperation, further enhancing spectrum efficiency to support the development of an integrated satellite-terrestrial communications network in North America, based on MSV's patented ancillary terrestrial component technology.”

Despite this statement, Harbinger is aware that it will have to receive regulatory clearance for such a takeover before the deal could go through, and estimates that this could take anywhere between 12 and 18 months.

The company states: “Assuming an acceptable conclusion to the Regulatory Approvals process, (Harbinger) intends to enter into negotiations with the board of Inmarsat regarding the terms of an offer and endeavour to seek the recommendation of the Inmarsat board.”

“(Harbinger) expects that any offer, if made, would be made to shareholders of Inmarsat in the second half of 2009 and that such an offer would be completed as quickly as possible thereafter.”

At this stage it remains a case of ‘wait and see’ for Inmarsat. With these developments, and the global roll-out of FleetBroadband back on track with a newly scheduled satellite launch date, the second half of the year should prove to be a busy one.

(copied from the DigitalShip website)