(April 30): SES SA has agreed to buy Intelsat SA for $3.1 billion (RM14.78 billion) in cash to create a satellite giant that will better compete with billionaire Elon Musk’s Starlink, after reviving talks that fell apart last year.

The deal, which also includes contingent value rights, has been approved by both companies’ boards, the companies said in a statement on Tuesday (April 30), confirming an earlier Bloomberg News report. Closely held Intelsat’s investors, representing about 73% of common shares, have agreed to vote in favour of the deal, it said.

SES and Intelsat held discussions last year, though the talks collapsed after Intelsat failed to reach an agreement with SES and its major stakeholders on the future direction of the business. Luxembourg-based SES counts the small European nation’s government as its biggest shareholder.

SES’s depositary receipts fell 3.8% to €4.76 (RM24.30) in Paris trading at 9:24am after dropping more than 10% yesterday following the Bloomberg report on the talks. The shares had declined 20% this year, giving the company a market value of about €2.1 billion.

SES will finance the deal, which has an enterprise value of US$5 billion, with existing cash and equivalents as well as new debt, including hybrid bonds, the company said. The combined company will be based in Luxembourg and will maintain a “significant presence in the US, notably in the greater Washington” area.

A deal between the two companies would follow other consolidations in the sector, prompted by the high capital outlays required to build satellites and send them to space. In 2021, California-based Viasat Inc announced it would acquire Britain’s Inmarsat Group Holdings Ltd, and in July 2022, France’s Eutelsat SA agreed to combine with UK-backed low-earth orbit venture OneWeb Ltd.

Intelsat emerged from bankruptcy in 2022, cutting its US$16 billion debt in half. The company was founded in 1964 as an intergovernmental consortium and broadcasted the first moon walk before being privatised in 2001. Private equity firms BC Partners and Silver Lake bought it in 2008.