Intelsat to buy PanAmsat for $3.2 billion

MUMBAI: A wave of consolidation is sweeping the satellite sector. Intelsat Ltd. plans to buy PanAmSat Holding Corporation in an all-cash deal for $3.2 billion to create a premier satellite company.



The enlarged company will have a combined fleet of 53 satellites with an annual revenue of more than $1.9 billion. Serving customers in more than 220 countries and teritories, it will be a leader in the digital delivery of video content, the transmission of corporate data and the provisioning of government communications solutions, Intelsat said in a release.

The new company will offer customers expanded coverage with additional back-up satellites, support fiber networks, and enhanced operational capabilities for cable TV programmes, broadcasters, businesses and governments.



Says Intelsat CEO David McGlade, "The combination of Intelsat and PanAmSat creates an industry leader with the ability to provide competitive communications and video services to consumers and businesses. The two companies are complementary in customer, geographic and product focus. Together, we will continue providing the highest level of service to existing customers while growing new business in rapidly expanding communications markets."

McGlade will continue to serve as CEO while Joseph Wright, currently PanAmSat CEO, is expected to become chairman of the board upon completion of the transaction.

"Today, PanAmSat offers its video, data and government customers a highly reliable level of service that only a technically advanced and financially strong satellite operator can provide," said Mr. Wright. "Now, we will combine the best from both companies and bring a professional business approach to the new enterprise to benefit our customers, employees and shareholders. This is a 'win-win' for both companies, and a terrific outcome for all of PanAmSat's shareholders, who will receive $25 per share in cash -- a significant premium over the recent stock price and nearly a 40% premium over the IPO price of about six months ago. In addition, our shareholders will continue to receive dividends, at the current annual rate or higher, until we close the transaction."

PanAmSat has a fleet of 25 satelllites and is a leading global provider of video, broadcasting and network distribution and delivery services. It transmits 1,991 television channels worldwide. Intelsat's historic strength, on the other hand, has been in providing core telephony and advanced data services to developing and underserved regions around the world. "We will leverage our combined intellectual, material and people assets to continue the high-quality service Intelsat and PanAmSat customers have come to expect," said McGlade.

Under the merger agreement signed by the two companies, Intelsat will acquire all outstanding common shares of PanAmSat. Additionally, Intelsat will either refinance or assume approximately $3.2 billion in debt of PanAmSat Holding Corporation and its subsidiaries. Intelsat has received financing commitments for the full amount of the purchase price from a group of financial institutions led by Deutsche Bank Securities Inc, Citigroup Global Markets Inc, Credit Suisse First Boston LLC and Lehman Brothers Inc.

The merger requires approval from US antitrust regulators and the Federal Communications Commission. The companies expect to close the transaction in approximately six to 12 months.

The satellite industry has been witness to a series of merger activities over the last three years. PanAmSat was bought last year by an investor group of private equity firms. In 2001, SES Astra bought GE Americom for $5 billion, to form SES Global.

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