SES ASTRA BUYS GE AMERICOM FOR $2.7 BILLION PLUS STOCK
Rumored sale of GE Americom to SES Astra of Luxembourg was announced Wed. at Grand Hyatt Hotel at Satellite 2001 (CD March 7 p5). Companies said newly formed SES Global acquired total control of GE Americom stock and other assets for $2.7 billion in cash and 15.4 million shares in SES Global. Analysts estimated total value of deal at $5 billion. GE will have 25.1% economic interest and 20.1% voting interest in SES Global. In return, SES Global will acquire SES Astra in 1-to-1 exchange involving cash and stock swap worth $1.4 billion. GE Americom had revenue of $510 million last year. Combined assets of companies will create world’s largest satellite services provider with pro forma revenue of $1.26 billion for 2000, analysts said. It’s 2nd sale in as many days of major U.S. satellite operator as consolidation of industry continues.
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“We believe that the satellite industry is really in a transition phase and it’s going toward consolidation and globalization,” said SES Dir. Gen, and chmn. of Management Committee Romain Bausch: “We plan to remain an active player.” Agreement came after weeks of negotiations and compromise related to tax consequences for GE and noncompete provisions once transaction closes. Bausch said he expected deal to close in Sept. SES is best known for supplying radio and TV broadcast signals for many of leading TV programmers in Europe, including BBC, BSkyB, Canal, Kirch Gruppe, Viacom.
SES will take on $2.4 billion in debt to finance deal, increasing its total debt to $3.7 billion by end of year. Bausch said SES planned to increase free float of outstanding shares to 25% from current 18% to raise $700 million to pay down debt. SES will seek stock listing on N.Y. Stock Exchange when market conditions are better, Bausch said.
Transaction, which fulfills SES goal of entering U.S. market, is expected to receive “expedited regulatory approval” from FCC and SEC, said SES attorney Phil Spector. Deal will be financed through combination of new equity and debt with listing planned on N.Y. Stock Exchange. “We just don’t see any holes,” Spector said: “The companies are in separate markets and there’s no overlap of footprints.” He said regulatory officials had been appraised of sale in preliminary briefings. He said sale was “very positive” for global market, and “international benefits” met “ad pro competition aspects. “There aren’t going to be any problems with foreign ownership” and “no competing interests” that could stymie regulatory approval, Spector said. “The seller is also an investor.”
“This deal was a natural,” said GE Americom Pres. John Connelly: “It’s a win for all of our customers, stockholders and employees. This is just a super opportunity.” GE Capital CEO Denis Nayden called deal “best-in-class global combination” in satellite industry. “The complementary fit of SES and Americom in terms of reach, customers, services and people make this a terrific growth opportunity for our companies. Our customers will also be able to benefit from being able to transmit international content seamlessly through a fully integrated broadband satellite network.” Bausch said new company would be able to capitalize on synergies to build strong broadband service and would lead to “distinct competitive edge” and “ideal complement to SES’ reputation for unparalleled performance.”
SES Global will be holding company for subsidiaries SES Americom, which will retain hq in Princeton, N.J., and SES Astra, hub of European operations. SES Global also gets control of SES Multimedia, AsiaSat, NSAB and Star One along with GE Americom interests in Latin America and Asia. Company would become top global satellite provider for broadcast and broadband services, owning combined fleet of 28 satellites, 17 from GE Americom and 11 from SES Astra, in addition to 13 others from partnerships and investment interests that include AsiaSat (3), Sirius (3), Brasilsat (5) and 2 others through GE Americom interests in Latin America and Asia.
Connelly said his future role with company still was being determined, though he expected to be named vice chmn. and to one of 3 board seats reserved for GE Americom. “I hope to leverage some of my experience” to help new company, he said. “We want to take the best practices in each organization.” Bausch gave no timetable for announcing new management structure, saying: “We didn’t have time to address personnel issues. We wanted to get this deal done first.” Bausch did say he didn’t think company would use assets and market position to become DBS competitor to DirecTV and EchoStar.