Inmarsat takeover clears final hurdle

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A private equity consortium’s takeover of UK satellite company Inmarsat looks likely to go ahead after a group of hedge funds dropped plans to challenge the sale at a hearing on 3 December.

Their decision came after the buyers – UK-based Apax Partners, US-based Warburg Pincus and the Canada Pension Plan Investment Board (CPPIB) – said that they would not increase or extend their offer of US$3.4bn (£2.65bn).

Hedge funds Oaktree, Kite Lake and Rubric Capital wanted the judge to block the takeover because they said the price did not reflect the value of Inmarsat’s contract with Ligado, a US broadband company that licenses some of the satellite group’s airwaves.

Inmarsat’s buyer on 2 December made its offer final and said it would not extend the 10 December expiration date, in effect closing the window for the challengers to win any concessions.

The hedge funds say: “Having considered our position carefully, we now no longer intend to raise objections to the Scheme being sanctioned at the Hearing.”

Inmarsat’s shareholders decisively backed the takeover in May, with nearly 79% of shares voted in favour. The hedge funds, led by Oaktree with a 2.85% stake, argued that Ligado could be about to modify its licence from US regulators, which could potentially trigger payments to Inmarsat. The satellite company, which provides communications for aircraft, shipping and governments, said in November that the prospect and timing of any revenue or other value from its Ligado contract remained uncertain.

The decision by the hedge funds means that the takeover undertaken with a scheme of arrangement is likely to be approved in the court meeting scheduled for 3 and 4 December.

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