Satellite Operator Intelsat to Buy PanAmSat for $3.2 Billion
Satellite pioneer Intelsat Ltd. on Monday said that it was acquiring PanAmSat Holding Corp. for $3.2 billion in a deal that would add a top cable TV broadcaster to Intelsat’s dominant position as the biggest provider of space-based data and voice communications for governments and businesses.
Intelsat, created in 1964 through a partnership of 147 nations and then privatized in 2001, also would assume $3.2 billion of debt from PanAmSat in the deal.
The proposed merger would nearly double Intelsat’s satellite fleet to 53 spacecraft, creating a company with $1.9 billion in annual revenue.
A former unit of DirecTV Group Inc., PanAmSat’s satellites are still used to deliver DirecTV’s cable service and other direct broadcast TV services to about 125 million households, primarily in North and South America.
PanAmSat, based in Wilton, Conn., was acquired more than a year ago in a $3.4-billion buyout led by Kohlberg Kravis Roberts & Co. In March, it went public again with an initial public offering of 50 million shares priced at $18 a share.
Intelsat agreed to pay $25 a share, a 28% increase from the IPO price and a 26% premium over last week’s closing price for PanAmSat’s shares, which on Monday jumped $4, up 20%, to $23.80.
The acquisition comes half a year after Intelsat was acquired by an investment partnership named Zeus Holdings Ltd. for $3 billion. Before that deal, Intelsat’s top investor was Lockheed Martin Corp. with a 24% stake.
Although the deal would combine two of the industry’s biggest players, executives for the companies said the merger wouldn’t hurt competition because Intelsat and PanAmSat are strong in different regions and types of services.
They also echoed an argument voiced repeatedly in the telephone industry this year with SBC Communications Inc.'s purchase of AT&T; Corp. and Verizon Communications Inc.'s purchase of MCI Inc. -- the mounting competition among cable, phone, wireless and satellite providers more than makes up for the loss of an individual competitor in any one of those markets.
“Our biggest competition is really coming from fiber and other companies that are delivering a lot more signal than we are,” said PanAmSat Chief Executive Joseph Wright, who is slated to become chairman of the combined company.
The boards of both Intelsat and PanAmSat have approved the transaction, and shareholders owning about 58% of PanAmSat’s shares have agreed to approve the merger, the firms said.
The acquisition is expected to close in six to 12 months, pending approval from PanAmSat shareholders and regulators.