(AOF) – Concentration is intensifying in a satellite operator sector faced with the emergence of new players, such as Starlink. Once again, the operation was received coldly on the stock market. Strongest decline in the SBF 120 index, SES fell by 8.36% to 4.534 euros after signing an agreement for the acquisition of its American competitor, Intelsat. It will pay 3.1 billion dollars (2.8 billion euros) in cash.
Yesterday, SES shares had already lost more than 10% after Bloomberg mentioned the relaunch of discussions with a view to a potential merger.
Deutsche Bank explains the share decline by the fact that the market expected that SES would return to its shareholders a large part of the sums resulting from the release of the C band in the United States, in the form of a exceptional dividend or an improved dividend policy. Investors will focus on a reduced likelihood of large payouts to shareholders, Barclays points out. The group received 3 billion before taxes for the C band.
SES said it will maintain an annual base dividend of 0.50 euros per A share (0.20 euros per B share) and maintain a “stable to progressive” dividend policy.
The transaction was unanimously approved by the boards of directors of both companies and Intelsat shareholders owning approximately 73% of the common stock entered into customary support agreements committing them to vote in favor of the transaction.
The transaction will be financed by existing liquidity (2.4 billion euros as of March 31) and by the issuance of new debt, including hybrid bonds. SES will further issue Guaranteed Value Certificates in respect of any potential future monetization of collective use rights for up to 100 MHz of C-band spectrum.
The transaction will have a positive effect on SES’s free cash flow from the first year. SES expects $370 million in annual synergies, 70% of which will be realized within three years of the closing of the transaction.
Most synergies are expected to result from savings in SG&A costs, as well as future procurement efficiencies. The costs to implement these synergies are estimated at $155 million.
The company will benefit from a gross order book of €9 billion and will post revenues of €3.8 billion and adjusted Ebitda of €1.8 billion. Last year, SES achieved 2.03 billion euros in revenue and 1.025 billion euros in adjusted Ebitda.
The satellite operator has committed to respecting investment grade metrics, i.e. net leverage of less than 3 times within 12 to 18 months following the closing of the transaction.
Last year, Eutelsat finalized its merger with OneWeb. The announcement of the operation in 2022 led to a fall in Eutelsat shares.
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