Inmarsat Plc spurns EchoStar Corp takeover, calling it lowball offer

Inmarsat Plc rebuffed a takeover proposal from EchoStar Corp., saying the bid undervalued the British satellite company and its outlook as an independent business.

The “highly preliminary” offer was turned down by the board after discussions with its advisers, Inmarsat said in a statement on Friday. “It very significantly undervalued Inmarsat and its stand-alone prospects. The board remains highly confident in the independent strategy and prospects of Inmarsat.”

EchoStar, founded by billionaire Charlie Ergen, has long been seen as a potential bidder for Inmarsat, along with SoftBank Group Corp.’s OneWeb. A stock slump at the London-based company has put it at the top of analysts’ lists of potential targets for consolidation in the satellite industry, which is becoming increasingly crowded with a rising number of rigs going up to support new services such as in-flight Wi-Fi and transmission of digital photos.

A representative for EchoStar didn’t immediately respond to a request for comment.

The statement from Inmarsat followed a 13 per cent surge in its shares on Friday, the most in a decade. The stock is still down by more than half over the past two years and has declined 3.4 per cent so far in 2018.

A bid at 10 pounds a share for Inmarsat is the level at which the European satellite company’s executives would “undoubtedly” recommend an offer to investors, Giles Thorne, an analyst at Jefferies, said in a December note that argued the merits of an EchoStar bid. That’s more than double Friday’s closing price of 473.90 pence a share.

Aviation Services

Inmarsat sees aviation services as its biggest growth driver in the coming years and is also seeking to diversify into businesses like connected cars, after coping with a protracted slowdown in the shipping industry. The company is also facing new competition in the shipping business, its biggest revenue generator, after U.S.-based Iridium Communications Inc. last month won regulatory approval to start offering services from 2020.

Some of Inmarsat’s earlier stock gains on Friday may have been tied to rival SES SA winning authorization from the U.S. Federal Communications Commission for an expansion of its medium Earth orbit fleet, a decision that lifted shares across the sector.