British satellite operator Inmarsat Plc (LON:ISAT) is considering a US$3.3bn takeover approach from a consortium led by private equity firms Apax Partners and Pincus.
The company said it had received a non-binding offer from the consortium, which also includes pension funds Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan, on January 31 for US$7.21 a share in cash.
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However, the group only revealed the offer on late Tuesday after news of the approach was leaked.
In Wednesday morning trading, shares jumped 16.3% to 509.4p in reaction to the announcement.
Inmarsat said the proposal remains under discussion and there can be “no certainty to the terms on which any offer would be made” or that the talks would lead to a firm offer.
Under UK Takeover Panel rules, the consortium has until April 16 to make a formal offer
The proposed offer represents a 24% premium to Inmarsat’s closing share price on Tuesday.
Share price underperformance makes Inmarsat attractive takeover target
The approach from the consortium comes after US satellite company EchoStar pulled out of a takeover of Inmarsat last year.
In recent weeks, there has been market speculation that EchoStar was considering another approach.
A period of poor performance and an uncertain outlook has weighed on Inmarsat’s shares in recent years, making it attractive to buyout groups.
Inmarsat has been owned by private equity firms previously. Apax and Permira purchased a majority stake in the firm in 2003 before floating it in 2005.
Takeover approach hardly surprising, says analyst
Helal Miah, investment research analyst at The Share Centre, said it has long believed Inmarsat remained a takeover target following the failed bids by Echostar and Eutelsat last year. s
Miah said shares have gained on the news but are still some way short of the sterling equivalent takeover price of £5.45.
The reason for this, he said was: “Firstly it is a non-binding offer, nothing definite. Secondly, Inmarsat was adamant in remaining independent when Echostar made their approach at a much higher price, as Inmarsat’s management believed by remaining independent they could deliver more shareholder value over the long term.
He added: "However, since Echostar and Eutelsat dropped their bids, the shares on Inmarsat drifted lower, breaching below £4. A profit warning mostly relating to its struggling and largest division Maritime did not help."