Shares in Inmarsat Plc (LON:ISAT) plunged on Friday after the satellite group rejected a second offer from US rival Echostar.
The bid, formally lodged on Tuesday (July 3), was a mixture of cash and shares totalling 532p for each Inmarsat share, valuing the FTSE 250 firm at £3.2bn including debt.
“EchoStar believes that the improved proposal presents a compelling opportunity for Inmarsat's shareholders to realise certain value from their investment in Inmarsat while also participating meaningfully in the upside potential of the combined company,” read a stock market announcement this morning.
Inmarsat responded by claiming that the offer "very significantly undervalued" the company and its prospects.
It added: “The board remains highly confident in the independent strategy and prospects of Inmarsat.”
Shares fell 10% to 4.75p in early deals, as investors responded to Inmarsat's seeming unwillingness to engage in takeover talks.
READ: Mixed opinions on Inmarsat’s bid rejection
The London-based company rejected out of hand an initial multi-billion pound approach last month, claiming it “significantly undervalued” the company.
Despite the latest setback today, Echostar is not giving up, explaining in a stock market announcement that it is seeking further discussions with Inmarsat bosses “on a constructive basis”.
The latest 532p-a-share offer is some way below what analysts had been expecting.
RBC Capital said in a note to clients earlier this week that it thought 650p might be the opening offer but expected a bid of around 750p to tempt shareholders.
Without a recommendation from the board, RBC said Echostar is unlikely to succeed with its approaches.
“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.”
--Updates for share price and Inmarsat response--