Inmarsat Plc (LON:ISAT) saw its shares gain on Wednesday with the clock counting down until the deadline for Echostar Corp. (NASDAQ:SATS) to make a bid for its satellites rival.
Echostar has until 5pm BST on Friday, July 6 to make a firm offer for Inmarsat under the UK Takeover Panel's rules or face a six-month ban from bidding.
READ: Inmarsat shares come back down to earth as Eutelsat says does not intend to make an offer
In a note to clients, analysts at RBC Capital said that there is a high probability that Echostar will make a formal offer for Inmarsat, with an initial bid of around 650p a share.
In lunchtime trading, Inmarsat shares were changing hands at 528p each, up 3.3% on Tuesday’s close.
However, the RBC analysts said: “Whatever the initial offer, we think it will take an offer of at least 750p to gain any board or shareholder approval.”
And, they added: “Given the political backdrop (sensitive satellite infrastructure) we believe Echostar is likely to need a recommended offer as a hostile bid could allow the company to seek political protection.”
Looking at potential counter-bidders, the RBC analysts said they would also consider Japan’s SoftBank as a very credible bidder given its investment in satellite operator OneWeb, its previous attempt to buy rival Intelsat, and its global Internet of Things strategy and connections to Ligado – the company developing a satellite-terrestrial network to support 5G and IoT applications in North America
The analysts concluded that although regulatory uncertainty may keep the bid spread wide (c.15%), they reiterated an ‘outperform’ rating and 850p price target on Inmarsat shares.
No Eutelsat offer
At the end of last month, Eutelsat Communication SA revealed that it does not intend to make an offer for Inmarsat, just a day after the French satellites group said it was considering making a bid.
The French firm added that it is consequently, bound by the Takeover Code not to make a bid during the following six months except with the consent of the UK Takeover Panel unless Inmarsat’s board agrees, or a third party announces a firm intention to make an offer.
At the start of June, Inmarsat revealed it had rejected a takeover approach from Echostar, which has been building a stake in the UK firm, saying it believed the offer “significantly undervalued” the company.