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SPS/RR Media: Deal explained

On February 26th SES announced that its SES Platform Services (SPS) division would be acquiring Tel Aviv-based RR Media for about $242 million ($13.29 a share). The agreement is expected to close during the next few months, and without presuming too much both RR Media boss Avi Cohen and SPS CEO Wilfried Urner are planning for the future of the unified business.

Urner explained his plans: “The merger of SPS and RR Media is very exciting for us – not just for SES PS but for the SES group as a whole. For the past couple of years, SPS has been successful in providing digital media services to customers based in Europe. With our major customers around the world increasingly demanding more than just satellite capacity, it was a matter of time for us before we decided to scale up these capabilities on a global level as part of a wider strategy in video.”

“We still have much to do but both parties are delighted with the discussions that have taken place in the last month,” explained Urner.

Challenged that some observers had expressed the view that SPS had overpaid for RR Media (in that it was a 52 per cent premium over RR Media’s then share price), Urner said he was happy with the price paid. “As in every business we carried out a very detailed examination of the potential assets, and we have every reason to believe that we did not pay too much. It might look a little differently from an outside view [of the deal] but they have only a very small [number of shares] in free float so you cannot simply look at the share price in calculating what this business is worth. We are happy that our examination resulted in a fair price to both parties.”

Asked to explain how the two business would achieve synergies, Urner said that while both companies provided similar services, the operated in different geographies. “SPS has a strong foothold in Europe and has also started providing services across Africa and Asia. RR Media, on the other hand, is positioned as a global company and has over 1,000 media customers globally.”

“In addition to this synergy, SPS is used to working with premium customers and historically has started with big players such as Pro7 and Sky Deutschland. These clients and their viewers always expected a very high level of quality and service. For RR Media, it is a different world. While they serve hundreds of channels, some are owned by companies which are modest in size and therefore fair to say these companies have different demands and service expectations. And in the past few years, RR Media has been looking to develop basic tier into more premium clients – something that SPS firmly believes in,” added Urner.

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