British satellite company Inmarsat accepts $ 7.3 billion buyout by US rival Viasat | Inmarsat
UK satellite communications company Inmarsat has agreed to a $ 7.3 billion (£ 5.4 billion) buyout by California-based Viasat, becoming the latest UK tech company to be taken over by a foreign rival.
The deal is the latest in which a UK company that plays a key role in the UK economy and national security is to be taken over by foreign rivals or private equity firms. Inmarsat was listed on the London Stock Exchange before being privatized two years ago by a consortium including private equity firm Apax.
Viasat, who called the deal a “transformative” for the global communications industry, said he intends to work with the government to continue investing and increasing Inmarsat’s presence in the UK .
“Viasat plans to preserve and develop Inmarsat’s headquarters in London,” the US company said, announcing the agreement. “Viasat plans to build on Inmarsat’s presence in the UK and is committed to preserving and increasing the combined company’s investment in UK space communications.
Inmarsat provides mobile satellite services that underpin e-mail, internet and video conferencing, as well as in-flight wifi. It has 14 satellites in orbit and plans to launch seven more, and has provided satellite services to the Defense Ministry to improve ground communications for troops fighting in Afghanistan. It also provides switching services for ships.
The company, whose technology was used in the search for the missing Malaysia Airlines flight MH370 in 2014, employs around 860 people at its Old Street base and 1,800 around the world.
Viasat, who in 2019 had Priti Patel on a £ 1,000 an hour contract for five hours of work per month as a strategic advisor until she was appointed Home Secretary, said it would “engage in cooperation” with the British government to continue operating in the country following the same commitments made by the private equity consortium that took over Inmarsat two years ago.
“Together, we can advance broadband communications and create new hybrid space and terrestrial networks that improve performance, coverage, speed, reliability and value for customers,” said Mark Dankberg, executive chairman of Viasat.
Given the nature of Inmarsat’s business, the deal may be subject to review under the National Security and Investment Act 2021, legislation passed to protect key domestic assets from a foreign takeover.
The government has said it will continue to “closely monitor” the deal, which will be subject to regulatory scrutiny in a number of markets, including the UK.
A spokeswoman for the Department of Business, Energy and Industrial Strategy said: “The Business Secretary has the power under the Enterprise Act 2002 to intervene in acquisitions that raise concerns of public interest. The government recently strengthened these powers through the National Security and Investment Law, which comes into force on January 4, 2022. ”
In July, the government launched a review of the takeover of Welsh chipmaker Newport Wafer Fab by Nexperia, the Chinese company that acquired Britain’s largest semiconductor producer.
In April, the government ordered an investigation into Nvidia’s takeover of Cambridge-based chip designer Arm, citing potential national security concerns. Four months later, the Autorité de la concurrence et des marchés opened an in-depth investigation into the agreement after finding that it raised serious competition concerns.
“Joining Viasat is the right combination for Inmarsat at the right time,” said Rajeev Suri, Managing Director of Inmarsat. “The industrial logic is compelling and ensures that the UK has a strong and sustainable presence in the critical space sector over the long term. “
Viasat, which has a UK base in Farnborough and provides services and products to the Department of Defense, said he expected the combined company to be able to achieve savings of $ 190 million per year , but did not comment on potential job cuts.
“Decisions regarding the management of the combined company after the closing of the transaction will be made as part of the integration planning process,” he said.
Inmarsat was established in 1979 by the International Maritime Organization, the UN maritime body, as an international government organization to enable ships to communicate with the coast and call for help in the event of a emergency. It was privatized in 1999 and introduced on the LSE in 2005.
However, the company has struggled in recent years and faces increasing competition from rivals, most notably Elon Musk’s SpaceX. In July 2020, the government bought a £ 400million stake in satellite operator OneWeb as part of a post-Brexit effort to compete with the European Union’s Galileo system.