(Updated with details, context, stock price, analyst comment)
April 30 (Reuters) – Satellite telecommunications service provider SES announced on Tuesday the acquisition of Intelsat for $3.1 billion (2.8 billion euros).
Operators in the sector are in a race to develop satellite constellations, facing competitors such as Starlink from SpaceX, owned by Elon Musk, and Kuiper from Amazon.
The merger of the two companies will create a giant in the multi-orbit satellite sector with an enterprise value of 4.6 billion euros, they said in a press release.
The SES stock listed on the Paris Stock Exchange plunged 10.30% to 4.44 euros at 08:52 GMT.
For Antoine Lebourgeois, an analyst at Bryan Garnier, the merger focuses mainly on cost synergies and fails to address the challenges posed by competition from SpaceX’s Starlink and the imminent entry of Amazon’s Kuiper into the market. It therefore risks damaging SES’s competitiveness and growth prospects.
The merger, explain SES and Intelsat, should generate 2.4 billion euros in synergies, 70% of which within three years following the finalization of the agreement.
Synergies are expected to be achieved through “the combination of commercial, general and administrative savings as well as optimization of third party capacity costs and future procurement efficiencies”.
Antoine Lebourgeois considers the announced synergies credible, but according to him, the dominant feeling among investors is a preference for better returns via dividends or share buybacks rather than significant mergers and acquisitions.
Luxembourg’s SES and its American competitor Intelsat had already initiated discussions with a view to a possible merger in 2023, before putting an end to them without giving an explanation.
In France, Eutelsat merged last September with the British OneWeb, a global low-orbit satellite telecommunications network, to become Eutelsat Group.
The transaction, which is subject to necessary regulatory approvals, will be accomplished through the purchase of 100% of Intelsat Holdings’ shares through existing cash and the issuance of new debt, including hybrid bonds. It should be finalized during the second half of 2025.
The transaction was unanimously approved by the boards of directors of both companies, SES said in a press release.
The combined company will continue to be headquartered and domiciled in Luxembourg, while maintaining a significant presence in the United States.
(Written by Mathias de Rozario and Kate Entringer, with Olivier Sorgho, edited by Blandine Hénault)
