(Bloomberg) -- Inmarsat Plc received a takeover offer worth about $3.3 billion from a group of private equity and pension funds, the second approach in less than a year for the U.K. satellite company.
Apax Partners and Warburg Pincus, supported by the Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board, made the non-binding cash bid of $7.21 a share on Jan. 31, Inmarsat said Tuesday after the market close in London.
That’s sightly higher than an unsuccessful cash and equity bid last July from billionaire Charlie Ergen’s EchoStar Corp. that valued Inmarsat at 532 pence a share, or about $7.07 at the time. French rival Eutelsat Communications SA also weighed an offer before backing off.
Inmarsat faces growing competition from traditional rivals such as ViaSat Inc. and newer challengers including Richard Branson-backed OneWeb and Elon Musk’s SpaceX.
“We believe it is a good offer, and that Inmarsat isn’t worth much more,” James Congdon, an analyst at Canaccord Genuity, said in a note to clients. He cited a decline in Inmarsat’s profit margins and return on capital over the past eight years.
Inmarsat shares rose 16.7 percent as of 1:45 p.m. in London on Wednesday, giving the company a market value of 2.37 billion pounds ($3.12 billion).
The latest bid is 24 percent above Inmarsat’s closing price Tuesday. The proposal and its terms are still under discussion and it’s possible a firm offer won’t be made, Inmarsat said in its statement.
Read more from Bloomberg Opinion on why Inmarsat is weighing this offer
Apax was part of a consortium of investors that bought Inmarsat in 2003 and took it public two years later.
Private equity offers can be appealing to managers of target companies as they can include financial incentives and give executives the opportunity to keep running the company. A private equity buyout may also face fewer regulatory hurdles than a rival-led takeover.
U.K. Takeover Panel rules now kick in, meaning the bidding consortium will have a provisional deadline of April 16 to make a firm offer or walk away.
Representatives for Warburg Pincus and Apax declined to comment.
(Updates with analyst comment in fifth paragraph.)
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