The UK government is intervening in the US$3.4-billion sale of satellite operator Inmarsat to a group of funds on national security grounds.
The decision follows a recommendation last week by the Competition and Markets Authority to test whether the takeover announced in March raised public-interest concerns or could endanger national security.
The regulator has until 17 September to prepare a report on the competition and national security aspects of the deal for Jeremy Wright, the secretary of state for digital, culture, media & sport, according to a statement from his department on Monday. Inmarsat shares fell 1.4% to 554.20p as of 8.12am in London.
The consortium of funds proposing to buy Inmarsat has been seeking to win over UK officials. They made voluntary, legally binding pledges last week to keep strategic decisions regarding the company in the UK and to hold onto Inmarsat operations identified by the government as important to the country.
The group, which includes Apax Partners, Warburg Pincus, Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan, is seeking to buy Inmarsat via a joint venture company owned in equal shares, Connect Bidco. Apax was part of a consortium of investors that bought Inmarsat in 2003 and took it public two years later.
The consortium isn’t expecting significant issues to arise in the review and sees the intervention as normal for a transaction of this size, according to people familiar with the bidders’ thinking. They asked not to be identified discussing a sensitive matter.
Critical government functions
Representatives for Inmarsat, Warburg Pincus, the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan declined to comment.
Wright considered the views of his counterparts in defence, business, enterprise and industrial strategy, and the foreign and commonwealth office in deciding to intervene, according to the statement.
UK government interventions on national security grounds are rare. New rules were introduced a year ago to make it easier to block takeovers of companies when officials are concerned about risks to national security, especially when sensitive technology is being acquired by foreign bidders.
Inmarsat’s satellites link critical government functions, including naval operations, border security and emergency services, in Britain and dozens of other countries such as the US. Its commercial operations face growing competition from traditional rivals, such as ViaSat, and new challengers including the Richard Branson-backed OneWeb and Elon Musk’s SpaceX, which offer smaller, cheaper satellites. — Reported by Angelina Rascouet and Paula Sambo, (c) 2019 Bloomberg LP
