Eutelsat Shares Tumble After OneWeb Merger Talks Unveiled
2022.07.25 15:38
By Scott Kanowsky
Investing.com — Shares in Eutelsat Communications SA (EPA:ETL) tumbled toward the bottom of the pan-European STOXX 600 on Monday after the satellite operator confirmed that it is in talks for an all-share merger with rival OneWeb.
In a statement, Eutelsat said the transaction is the “logical next step” forward in its effort to boost its presence in the lucrative satellite connectivity market, where it will face competition from similar ventures backed by billionaire entrepreneurs like Jeff Bezos and Elon Musk.
The deal would see shareholders from each company own 50% of the combined group, with OneWeb stakeholders swapping their interest in the U.K. firm in exchange for newly issued Eutelsat shares. Eutelsat already holds 23% of shares in OneWeb, the space internet company that was saved from bankruptcy in 2020 thanks in part to a significant investment from the British government.
According to media reports, the combined entity would value the U.K.’s stake at $600 million, and pair it alongside investments from the French and Chinese governments. Paris and Beijing already own a 20% and 5% stake in Eutelsat, respectively.
Eutelsat did not confirm these reports in its statement.
However, Eutelsat warned that “there can be no assurance” that the negotiations will result in a final agreement. Any combination would need shareholder and regulatory approval, the company added.
