Eutelsat Communications and OneWeb are expected to join forces in a deal that values the British satellite operator at $3.4 billion, taking a step towards creating a European champion to rival Elon Musk’s SpaceX.
OneWeb shareholders will own 50% of Eutelsat, which will continue to be listed in Paris, and will apply to be listed on the London Stock Exchange, the companies said in a statement.
The deal is the latest merger in a race between businesses and governments to provide fast connectivity via low-orbit satellites.
The governments of both the UK and France have stakes in OneWeb and Eutelsat respectively, and the UK will continue to have a special stake, giving it some veto rights over strategic decisions such as the location of the company’s headquarters.
Although the shareholders will split the company, the deal bears the hallmarks of a takeover by Eutelsat. OneWeb will retain its own branding and operate the low-cost operations of the combined group, which is listed in Paris.
The Eutelsat chairman is to be chairman of the new entity, with his OneWeb counterpart as co-chairman and vice-chairman.
Eutelsat’s CEO will lead the new group.
The UK government has agreed on a number of national security issues and that OneWeb will prioritize construction procurement from UK operations, according to a government statement.
Both the United Kingdom and France will have representation on the board.
The deal gives Eutelsat a “unique position” in the market and has the potential to generate €1.5 billion in increased revenue as well as investment and cost synergies.
Investor reaction to the deal was negative yesterday, with Eutelsat shares down 18% after the deal talks were announced.
Eutelsat will also suspend its dividend for two years after this year to help pay for OneWeb’s next generation of satellite launches.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
