Eutelsat rejects €12 per share bid from Patrick Drahi

Paris-based satellite operator Eutelsat has rejected an unsolicited takeover offer from French telecoms billionaire Patrick Drahi, Financial Times reported.
Eutelsat business“Eutelsat Communications confirms that it has received an unsolicited, preliminary and non-binding proposal from Patrick Drahi in connection with a potential transaction on all of the company’s share capital. The relevant governance bodies of Eutelsat Communications have unanimously decided not to engage in discussions based on the terms of this proposal,” the satellite operator said.

Eutelsat, one of the world’s leading commercial satellite operators, viewed the price submitted as too low. Drahi offered to pay roughly €12 per share for Eutelsat, FT reported. That compares with its share price of €10.35 at the close of trading in Paris on Wednesday, giving it a market capitalisation of €2.4 billion.

Eutelsat has suffered five consecutive years of declining revenues, Reuters said in a report.

Drahi owns telecoms and cable assets in France and the US and auction house Sotheby’s. Drahi recently took a 12.1 percent stake in UK telecoms BT Group, making it the British company’s biggest shareholder.

Eutelsat competes with Luxembourg-based SES and UK-based Intelsat and operates 36 satellites over Europe, the Middle East, and Africa. The company, which is 20 percent owned by the French state, sells capacity to broadcasters, delivers broadband services and provides connectivity to aeroplanes and ships.

In April, Eutelsat bought a 24 per cent stake in OneWeb, the space-based internet pioneer, for $550 million in a significant expansion bet.

Analyst predicted a period of consolidation in the satellite sector as traditional sources of revenue such as TV broadcasting shrink, and new competitors like Elon Musk’s SpaceX seek to build new, cheaper satellite networks closer to Earth.

A move into satellite services would be a departure for Drahi because there would be few synergies with his telecoms and cable assets. “It is impossible to say why Eutelsat would be of interest to Patrick Drahi at this point,” wrote Jefferies analysts in a note. “Eutelsat has been in value territory for some time, but its candidacy for acquisition was far better suited to in-market consolidation.”