The European acquirer reckons the expected total synergies will be equivalent to 85% (€2.4 bn) of the total equity value of the transaction
Luxembourg-based SES is to acquire Virginia, US-based Intelsat for a cash consideration of $3.1 billion (€2.8 billion) “and certain contingent value rights”. This deal will be done by SES purchasing 100% of the equity of Intelsat Holdings S.a.r.l. (that is, a limited company).
The Financial Times reported the two were in possible merger talks as far back as 2022.
The combined SES will continue to be headquartered and domiciled in Luxembourg (picture shows SES’ HQ in Betzdorf, Luxembourg), while maintaining significant presence in the US, “notably in the greater Washington, DC area”.
The companies have a gross backlog of €9 billion, revenue of €3.8 billion, and adjusted earnings before interest, tax, depreciation and amortisation of €1.8 billion.
Stronger together
The parties say the combination will create a stronger, multi-orbit operator with greater coverage, improved resilience, more solutions and greater resources to invest in innovation. Not to mention creating a bigger pool of talent, expertise and experience.
The thinking is that the combination will deliver greater value for customers and partners, and “a compelling alternative in the new era of growth, innovation, and competition for the satellite communications industry,” according to the press statement.
SES states that the deal fully aligns with its financial policy and is underpinned by expected total synergies equivalent to 85% of the total equity value of the transaction. The parties expect this will be realised within three years of the deal closing.
Complementary assets
In large part, this is because the new entity will combine complementary investment in space, ground, and network innovation to unlock future value and opportunity. The two have a combined fleet of more than 100 Geostationary Earth Orbit (GEO) and 26 Medium Earth Orbit (MEO) satellites.
The joint entity will benefit from enhanced coverage, greater network resiliency, complementary spectrum (C-, Ku-, Ka-, Military Ka-, X-band, and Ultra High Frequency) rights, and improved service delivery utilising an expanded network of ground segment assets.
By end-2026, eight new GEO (including six software-defined) satellites and seven new MEO (O3b mPOWER) satellites are expected to be launched adding more redundancy and capacity.
The transaction has been unanimously approved by the Board of Directors of both companies. Intelsat shareholders holding about 73% of the common shares have entered into support agreements meaning they will vote in favour of the transaction.
The transaction is subject to the usual regulatory filings and approvals, which they expect to receive in the second half of 2025.
Satellite in the mainstream
Adel Al-Saleh, CEO of SES, commented, “This important, transformational agreement strengthens our business, enhances our ability to deliver world-class customer solutions, and generates significant value for our shareholders in a value accretive acquisition which is underpinned by sizeable and readily executable synergies.
“In a fast-moving and competitive satellite communication industry, this transaction expands our multi-orbit space network, spectrum portfolio, ground infrastructure around the world, go-to-market capabilities, managed service solutions, and financial profile. I am excited by the opportunity to bring together our two companies and augment SES’s own knowledge base with the added experience, expertise, and customer focus of the Intelsat colleagues.”
He added, “This combination is also positive for our supply chain partners and the industry in creating new opportunities as satellite-based solutions become an increasingly integral part of the wider communications ecosystem.”
The end of torrid times?
David Wajsgras, CEO of Intelsat, said, “Over the past two years, the Intelsat team has executed a remarkable strategic reset. We have reversed a 10-year negative trend to return to growth, established a new and game-changing technology roadmap, and focused on productivity and execution to deliver competitive capabilities. The team today is providing our customers with network performance at five 9s and is more dedicated than ever to customer engagement and delivering on our commitments. This strategic pivot sets the foundation for Intelsat’s next chapter.
“By combining our financial strength and world-class team with that of SES, we create a more competitive, growth-oriented solutions provider in an industry going through disruptive change. The combined company will be positioned to meet customers’ needs around the world and exceed their expectations.”