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French company Eutelsat and London-based OneWeb have signed an initial merger agreement combining $3.4 billion to create a global satellite connections giant that could rival Elon Musk's SpaceX Starlink & Amazon's Kuiper.
OneWeb is a leading satellite communications operator which operated a fleet of Low-Earth Orbit satellites to connect businesses with its headquarters in London. It was acquired by the Bharti Group (of Airtel) & the UK government in 2020.
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On the other hand, Eutelsat is a French satellite connections operator which operates 36 satellites in the geostationary orbit.
In this transaction valued at $3.4 billion, shareholders of OneWeb will be allotted new shares of Eutelsat where shareholders of the former will hold 50% of the enlarged share capital. The deal is structured as such that Eutelsat will hold 100% in OneWeb, excluding the special share of the UK Government.
The merger (essentially a takeover by Eutelsat) will allow the combined entity to operate a fleet of 36 GEO & 648 LEO satellites as the company will be able to access a greater set of opportunities in both B2B & B2C segments which is projected to reach $16 billion by 2030.
“I am delighted to announce this new and significant step in the collaboration between Eutelsat and OneWeb. Bringing together our two businesses will deliver a global first, combining LEO constellations and GEO assets to seize the significant growth opportunity in Connectivity, and deliver to our customers' solutions to their needs across an even wider range of applications,” said Dominique D’Hinnin, Eutelsat’s chairman.
The merger was not perceived positively by investors as the stock fell by 18%. The stock had declined 33% in two trading sessions but managed to rise 4% to close at €7.29 per share on Wednesday. It is worthy to note that OneWeb is not a listed entity.
Article by Aman Agarwal.
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