PARIS (Agefi-Dow Jones)–Satellite operator Eutelsat announced on Monday that it has entered into discussions with its co-shareholders in the British broadband Internet service provider OneWeb with a view to a possible merger of the two companies. , which would be realized through an exchange of shares.
“There is no guarantee that these discussions will lead to an agreement”, warned in a press release Eutelsat, which “will inform the market of any new development in due course”.
On the Paris Stock Exchange, this announcement led to a severe drop in the Eutelsat share, which on Monday showed the sharpest decline in the SBF 120 index, falling 15.8% to 8.78 euros. Indeed, the planned operation would be unfavorable to the shareholders of the French satellite operator, which already holds 23% of the capital of OneWeb. The transaction would be structured as a contribution by OneWeb shareholders of their stake in the British company to Eutelsat, in exchange for newly issued Eutelsat shares, according to the draft presented on Monday. Following the operation, the shareholders of Eutelsat and OneWeb would each hold 50% of the shares of the merged entity.
“This means that the shareholders of Eutelsat will be diluted to own only half of a new company whose economic model is not known”, is surprised by an analyst based in London who says he is “very incapable of building a valuation model for the future entity given the limited information held at this stage”.
A “political” file
Being able to constitute a risk as well as an opportunity, the proposed merger of the two companies also has “an important political dimension”, notes Berenberg. To date, the French State is the main shareholder of Eutelsat, of which it holds 20% of the capital through Bpifrance, while the British government has owned 18% of the shares of OneWeb since it piloted the rescue in 2020.
At the end of the merger, the French and British States should each hold 10% of the capital of the new entity and benefit from a seat on its board of directors, indicated a source close to the file to the agency Agefi- Dow Jones. The current CEO of Eutelsat, Eva Berneke, would assume these same functions within the future entity, which will be listed on the Paris and London stock exchanges, added this source.
According to Eutelsat, “the combined entity would be the first multi-orbit satellite operator and would be uniquely positioned to address the booming connectivity market, estimated at $16 billion by 2030”. The armed conflict in Ukraine has further underlined the strategic nature of satellite communications, as evidenced by the recent support provided by the North American groups MDA and SpaceX to kyiv’s war effort. With this in mind, the complementarity of Eutelsat, which has geostationary assets, and OneWeb, which specializes in low-orbit satellites, appears promising in theory.
Romain Pierredon, an analyst at AlphaValue, warns, however, that “bringing OneWeb back to profitability will require heavy investment and will require several years of patience”. “The logic of the transaction appears to be the use of Eutelsat’s robust cash generation to complement and enhance OneWeb’s investment plans, which will provide the necessary growth, albeit at the cost of being capital intensive” , supports Societe Generale.
Berenberg estimates that Eutelsat should publish on August 3 a net profit of 276 million euros for its 2021-2022 financial year, which ended at the end of last June, after deduction of the estimated share of losses of OneWeb. to 45 million euros.
-Dimitri Delmond, Agefi-Dow Jones; +33 (0)1 41 27 47 31; [email protected] ed: VLV
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July 25, 2022 07:42 ET (11:42 GMT)