Apax and Permira finalise $5bn acquisition of moon-landing firm

Click to follow
The Independent Online

The company that broadcast the moon landings in 1969 and kept the "Hotline" open between the White House and the Kremlin during the Seventies has been sold for $5bn (£2.7bn), including $2bn of debt, to a private equity consortium including two leading British funds.

The company that broadcast the moon landings in 1969 and kept the "Hotline" open between the White House and the Kremlin during the Seventies has been sold for $5bn (£2.7bn), including $2bn of debt, to a private equity consortium including two leading British funds.

Intelsat, the Bermuda-based satellite communications group, has been for sale since May when the company shelved plans for a stock market listing.

There has been intensive bidding in the past three months. A private equity consortium comprising Apax Partners and Permira of the UK with the American investors Apollo Management and Madison Dearborn sealed the deal last night. Shareholders in the privately owned satellite group agreed to sell for $18.75 a share.

The Apax and Permira consortium had previously been rivals for the company against Apollo and Madison Dearborn until the groups joined forces. But they have faced stiff competition from another rival consortium of private equity funds comprising Kohlberg Kravis Roberts (KKR), Providence Equity Partners and Carlyle.

The two consortiums have made satellite communications investments already. Apax and Permira bought the UK-based Inmarsat for $1.5bn last year. Earlier this year, KKR paid $3.55bn for PanAmSat and then sold off stakes to Carlyle and Providence.

Another private equity fund, Blackstone, paid $950m for the Dutch New Skies Satellites this year and is thought to be bidding for Intelsat.

Intelsat's biggest investors, who will enjoy a windfall from the sale, are Lockheed Martin, which has a 24 per cent stake, Tata Sons of India, with 5.4 per cent, and France Telecom, with 5 per cent. The company operates 27 communication satellites covering the globe. It is run by Conny Kullman, the chief executive, who has been at the company since 1983 and was a heavily involved in transforming the business from a co-operative venture into a private company in 2001.

Prices that satellite operators have been able to charge customers have been falling because of overcapacity but consolidation driven by private equity funds is now expected to put a brake on falling prices.

In March, Intelsat reported that it generated sales of $952.8m in 2003, translating into profits of $181.1m. Free cash flow - a key performance indicator for private equity firms - was $382.1m. This was partly due to the deferral of the launch of the Intelsat 10-02 satellite. The costs associated with this launch will be recognised in 2004, according to the company.

As well as the moon landings in 1969, the Intelsat system was used to broadcast television pictures of the first US-Soviet space meetings between the Apollo and Soyuz missions in 1975.

Comments