Inmarsat’s shareholders enjoyed a nice uplift on the news that Apax Partners could mount a bid to buy the satellite operator and take the business private.

As reported on March 20^th the bid values Inmarsat at $7.21 per share, which implies a value of £5.45p per share. The bid assumes the proposed final dividend of $0.12 for 2018 would not be paid to current shareholders, such that the consortium is effectively paying £5.35p/share. The private equity firms working alongside Apax have until April 16th to make a formal offer.

A note from Sami Kassab, an equity analyst at investment bank Exane/BNPP, reminds clients that Apax also owns Marlink, one of Inmarsat’s key distributors in the Maritime segment. “We think Inmarsat’s management is likely to favour a take-private bid (vs. a take-over scenario) especially if it comes with the strategic benefit of closer integration with Marlink,” suggests Kassab.

However counter bids are possible. “Last year, both Echostar and Eutelsat had stated their interest in Inmarsat. Apax’s offer is on par with Echostar’s. Echostar’s put up-or-shut up period has ended. We believe a counterbid from Echostar is a credible possibility and note that such a tie-up should offer some cost synergies (European S-band network),” said Kassab.

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