SES to Acquire Intelsat for €2.8bn

On Tuesday 30 April 2024, Luxembourg satellite company SES and fellow satellite services provider Intelsat announced an agreement for SES to acquire Intelsat through the purchase of 100% of the equity of Intelsat Holdings S.a.r.l. for a cash consideration of $3.1 billion (€2.8 billion) and certain contingent value rights.

The merger, which follows failed talks last year, is expected to create "a stronger multi-orbit operator with greater coverage, improved resiliency, expanded suite of solutions, enhanced resources to profitably invest in innovation, and benefit from the collective talent, expertise, and track record of both companies".

According to the two companies, the transaction, which is subject to relevant regulatory clearances / filings and customary provisions concerning cooperation and measures in seeking such regulatory clearances (expected during the second half of 2025), is fully supportive of SES's financial policy and is underpinned by expected total synergies equivalent to 85% of the total equity value of the transaction.

The transaction has been unanimously approved by the Board of Directors of both companies and Intelsat shareholders holding approximately 73% of the common shares have entered into customary support agreements requiring them to vote in favour of the transaction.

"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," commented SES CEO Adel Al-Saleh, later adding that the transaction "expands our multi-orbit space network, spectrum portfolio, ground infrastructure around the world, go-to-market capabilities, managed service solutions and financial profile".

He continued: "Our expanded business will deliver sustained EBITDA growth and strong cash generation, in turn supporting incremental profitable investment in capabilities and solutions to fulfil rapidly expanding and evolving customer demand while also delivering sustained returns to shareholders".

David Wajsgras, CEO of Intelsat, explained: "Over the past two years, the Intelsat team has executed a remarkable strategic reset. [...] 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".

On closing of the transaction, SES will pay $3.1 billion (€2.8 billion) to acquire 100% of the equity of Intelsat Holdings S.a.r.l. in a transaction which implies an Enterprise Value of $5.0 billion (€4.6 billion). The transaction will be financed from existing cash and equivalents (which stood at €2.4 billion on 31 March 2024) and the issuance of new debt, including hybrid bonds. Additionally, SES will issue contingent value rights in respect of a portion of any potential future monetisation of the combined collective usage rights for up to 100 MHz of C-band spectrum.

Prior to closing, both companies' existing management teams will maintain their focus on executing against their respective near-term business and financial objectives, as well as the closing of the transaction.

The combined SES will continue to be headquartered and domiciled in Luxembourg, while maintaining "significant" presence in the United States, notably in the greater Washington, DC area.

By integrating the two companies, SES expects to deliver synergies with a total net present value (NPV) of €2.4 billion (after approximately €155 million of estimated realisation costs), representing an annual run rate of €370 million of which approximately 70% is anticipated to be executed within three years after the closing of the transaction. The NPV of the synergies is equivalent to 85% of the total equity value of the transaction, while opportunities to realise further synergies will be explored before and after closing.

Most of the synergies are expected to be executed from the combination of selling, general and administrative savings as well as optimisation of third-party capacity costs and future efficiencies in procurement. The remaining synergies will be captured from optimising the combined satellite fleets and ground infrastructure with the process expected to start soon after closing.

With a combined fleet of more than 100 Geostationary Earth Orbit (GEO) and 26 Medium Earth Orbit (MEO) satellites, the combined SES expects to benefit from enhanced coverage, greater network resiliency, complementary spectrum rights and improved service delivery utilising an expanded network of ground segment assets.

By the end of 2026, eight new GEO (including six software-defined) satellites and seven new MEO (O3b mPOWER) satellites are expected to be launched, adding further redundancy and additional growth capacity.

Based on the 2024 financial outlook, the combined company is expected to generate approximately €3.8 billion in annual revenue (after adjusting for intercompany eliminations) and is expected to deliver low- to mid-single digit average annual growth over the medium-term.