Value accretive transaction underpinned by
€2.4 billion (NPV) of readily executable synergies.
Creating a stronger multi-orbit operator
with ~60% of revenue in high growth segments.
Enhances competitive offerings to deliver
customer value through segment-relevant solutions.
Expanded cash flows, profitable growth
outlook, & strong balance sheet drive total shareholder
return.
SES S.A. (“SES”) and Intelsat S.A. (“Intelsat”) announce an
agreement for SES to acquire Intelsat through the purchase of 100%
of the equity of Intelsat Holdings S.a.r.l. for a cash
consideration of $3.1 billion (€2.8 billion) and certain contingent
value rights. The combination will create a stronger multi-orbit
operator with greater coverage, improved resiliency, expanded suite
of solutions, enhanced resources to profitably invest in
innovation, and benefit from the collective talent, expertise, and
track record of both companies.
The combination will deliver greater value for customers and
partners, as well as providing a compelling alternative in the new
era of growth, innovation, and competition for the satellite
communications industry.
The transaction, which is subject to relevant regulatory
clearances/filings and customary provisions concerning cooperation
and measures in seeking such regulatory clearances, which are
expected to be received during the second half of 2025, is fully
supportive of SES’s financial policy and is underpinned by expected
total synergies equivalent to 85% of the total equity value of the
transaction. The transaction has been unanimously approved by the
Board of Directors of both companies and Intelsat shareholders
holding approximately 73% of the common shares have entered into
customary support agreements requiring them to vote in favour of
the transaction.
Transaction highlights
- Delivers €2.4 billion (NPV) of synergies (85% of equity
consideration) with 70% executed within 3 years after closing.
- Expands multi-orbit satellite-based capabilities, spectrum
portfolio, and global ground network to serve customers.
- Increases revenue in high demand and growing Networks segments
representing ~60% of expanded revenue base.
- Combines complementary investment in space, ground, and network
innovation to unlock future value and opportunity.
- Brings together a wealth of collective talent, expertise,
engineering knowledge, and go-to-market capabilities.
- Company(1) will benefit from gross backlog of €9 billion,
revenue of €3.8 billion, and Adjusted EBITDA of €1.8 billion.
- Medium-term Adjusted EBITDA growth driving future free cash
flow (FCF) generation outlook.
- Commitment to investment grade metrics with net leverage below
3 times within 12-18 months after closing.
- Commitment to annual dividend of €0.50 per A-share with
expanded FCF base supporting potential for future increases.
Adel Al-Saleh, CEO of SES, commented: “This important,
transformational agreement strengthens our business, enhances our
ability to deliver world-class customer solutions, and generates
significant value for our shareholders in a value accretive
acquisition which is underpinned by sizeable and readily executable
synergies.
In a fast-moving and competitive satellite communication
industry, this transaction expands our multi-orbit space network,
spectrum portfolio, ground infrastructure around the world,
go-to-market capabilities, managed service solutions, and financial
profile. I am excited by the opportunity to bring together our two
companies and augment SES’s own knowledge base with the added
experience, expertise, and customer focus of the Intelsat
colleagues.
Going forward, customers will benefit from a more competitive
portfolio of solutions with end-to-end offerings in valuable
Government and Mobility segments, combined with value-added,
efficient, and reliable offerings for Fixed Data and Media
customers. This combination is also positive for our supply chain
partners and the industry in creating new opportunities as
satellite-based solutions become an increasingly integral part of
the wider communications ecosystem.
Our expanded business will deliver sustained EBITDA growth and
strong cash generation, in turn supporting incremental profitable
investment in capabilities and solutions to fulfil rapidly
expanding and evolving customer demand while also delivering
sustained returns to shareholders.”
David Wajsgras, CEO of Intelsat, commented: “Over the
past two years, the Intelsat team has executed a remarkable
strategic reset. We have reversed a 10-year negative trend to
return to growth, established a new and game-changing technology
roadmap, and focused on productivity and execution to deliver
competitive capabilities. The team today is providing our customers
with network performance at five 9s and is more dedicated than ever
to customer engagement and delivering on our commitments. This
strategic pivot sets the foundation for Intelsat’s next
chapter.
By combining our financial strength and world-class team with
that of SES, we create a more competitive, growth-oriented
solutions provider in an industry going through disruptive change.
The combined company will be positioned to meet customers’ needs
around the world and exceed their expectations.”
All financial information in this press release is stated using
a foreign exchange (FX) rate of €1: $1.09. Pro forma (combined)
revenue and gross backlog is adjusted to eliminate intercompany
transactions. Pro forma leverage is after acquisition costs
including related fees. The financial outlook assumes nominal
satellite launch schedule and nominal satellite health status. Net
Present Value (NPV) of expected synergies includes expected
realisation costs. Further information regarding the financial
information presented is provided below (see page 5).
Overview of the transaction
On closing of the transaction (subject to receipt of relevant
regulatory clearances and other relevant requirements expected
during the second half of 2025), SES will pay $3.1 billion (€2.8
billion) to acquire 100% of the equity of Intelsat Holdings
S.a.r.l. in a transaction which implies an Enterprise Value of $5.0
billion (€4.6 billion). The transaction will be financed from
existing cash and equivalents (which stood at €2.4 billion on 31
March 2024) and the issuance of new debt, including hybrid bonds.
Additionally, SES will issue contingent value rights in respect of
a portion of any potential future monetisation of the combined
collective usage rights for up to 100 MHz of C-band spectrum.
Prior to closing, both company’s existing management teams will
maintain their focus on executing against their respective
near-term business and financial objectives, as well as closing of
the transaction.
The combined SES will continue to be headquartered and domiciled
in Luxembourg, while maintaining significant presence in the U.S.,
notably in the greater Washington, D.C. area.
Highly accretive acquisition
The transaction will be free cash flow accretive to SES from
Year 1 and brings together two trusted operators with a combined
gross contract backlog of €9 billion, growth-oriented portfolios
concentrated on Networks segments with expanding demand, shared
vision of delivering seamless end-to-end customer solutions, and
complementary investment in innovation, while also sharing strong
balance sheet metrics and long-term cash generation
fundamentals.
By integrating the two companies, SES expects to deliver
synergies with a total net present value (NPV) of €2.4 billion
(after approximately €155 million of estimated realisation costs),
representing an annual run rate of €370 million of which
approximately 70% is anticipated to be executed within 3 years
after closing of the transaction. The NPV of the synergies is
equivalent to 85% of the total equity value of the transaction,
while opportunities to realise further synergies will be explored
before and after closing.
Most of the synergies are expected to be executed from the
combination of selling, general, and administrative savings as well
as optimisation of third-party capacity costs and future
efficiencies in procurement. The remaining synergies will be
captured from optimising the combined satellite fleets and ground
infrastructure with the process expected to start soon after
closing.
Creating a stronger multi-orbit operator in the new market
landscape
Bringing together these two companies, with the associated
synergies, will create a stronger multi-orbit operator better able
to compete in a fast-moving satellite communications landscape and
respond to the evolution of competing communications
technologies.
With a combined fleet of more than 100 Geostationary Earth Orbit
(GEO) and 26 Medium Earth Orbit (MEO) satellites, the combined SES
will benefit from enhanced coverage, greater network resiliency,
complementary spectrum (C-, Ku-, Ka-, Military Ka-, X-band, and
Ultra High Frequency) rights, and improved service delivery
utilising an expanded network of ground segment assets.
By end-2026, 8 new GEO (including 6 software-defined) satellites
and 7 new MEO (O3b mPOWER) satellites are expected to be launched
adding further redundancy and additional growth capacity.
On a pro forma basis, Government, Mobility, and Fixed Data
segments with expanding customer demand for reliable,
high-performance connectivity solutions anywhere on land, at sea,
or in the air will represent around 60% of SES’s total expanded
revenue base of €3.8 billion, underpinning the group’s orientation
to valuable growth segments.
The integrated company will have a stronger financial profile
compared with the standalone SES, with combined gross backlog of €9
billion (on 31 December 2023) underpinning future cash flow
visibility, expected Adjusted EBITDA of €1.8 billion (year ended 31
December 2024) demonstrating robust profitability, and expected
Adjusted EBITDA less CapEx of €0.8 billion (year ended 31 December
2024) supporting recurring cash generation fundamentals.
In turn, the stronger financial profile enhances the ability to
better invest in future network infrastructure, customer solutions,
and future use-cases and/or business diversification opportunities
with a better risk profile, than could be done by the two companies
on a standalone basis.
Strengthening competitive positioning with enhanced customer
solutions
With the creation of a stronger multi-orbit operator, customers
across Government, Mobility, Fixed Data, and Media segments will
benefit from an expanded set of capabilities and solutions which
will enable them to expand their network reach, add further
resiliency, improve productivity across their operations, and bring
world-class experiences to their end-users.
The combined company will be able to better meet growing
Government demand for secure, reliable, and high-performance
connectivity for a wide range of mission-critical applications.
Customers will benefit from the integrated, multi-orbit solutions
of both companies and their expertise in delivering trusted
services for some of the most demanding government agencies and
missions around the world.
In Mobility, customers will be better served from bringing
together the two companies’ complementary offerings, notably
Intelsat’s commercial aviation division which today is serving
nearly 3,000 connected aircraft, and SES’s maritime business which
includes supporting five major cruise line operators via fully
managed, multi-orbit connectivity agreements. The combination will
also support the evolving needs of channel partners across the
segments.
In Fixed Data, customers will be able to take advantage of the
combined company’s expanded multi-orbit network coverage,
complementary innovations in software-defined delivery, and
competitive offerings capable of seamless integration with cloud
and 5G applications. Both companies have a proven record serving
the requirements of major telecommunications companies, mobile
network operators and cloud service providers in this growth
segment.
In Media, the transactions brings together complementary
capabilities for customers including pay-TV operators,
free-to-air/free-to-view platforms, public and private
broadcasters, and sports & events brands who will have access
to global audience reach with improved redundancy features via a
competitive range of broadcast solutions, plus additional
value-added services.
Building sustained total shareholder return
Based on the 2024 financial outlook, the combined company is
expected to generate approximately €3.8 billion in annual revenue
(after adjusting for intercompany eliminations) and is expected to
deliver low- to mid-single digit average annual growth over the
medium-term. Growth will be driven by the combination of high
growth Government, Mobility, and Fixed Data businesses, anchored by
a Media business with solid cash generation fundamentals, despite
contracting capacity demand in mature markets due to expansion of
terrestrial broadband networks and changing consumer viewing habits
against which the combined company will be better positioned to
compete.
Including the benefit of OpEx synergies, 2024 pro forma Adjusted
EBITDA of approximately €1.8 billion is expected to increase by a
mid-single digit average annual growth rate. Adjusted EBITDA
includes around €175 million of Intelsat non-cash revenue.
The two companies are expected to invest combined CapEx of
approximately €1 billion in 2024, with an average of €600-650
million per annum for the period 2025-2028 including synergies. The
combination of growing EBITDA and decreasing CapEx will support
future free cash flow expansion, supporting future investment in
innovation and shareholder returns.
The transaction is expected to deliver an internal rate of
return of more than 10%. On closing, Adjusted Net Debt to Adjusted
EBITDA is forecast to be around 3.5 times before reducing to below
3 times within 12-18 months after closing, consistent with SES’s
commitment to maintain investment grade balance sheet metrics. SES
will maintain an annual base dividend of €0.50 per A-share (€0.20
per B-share) with a stable to progressive dividend policy.
Guggenheim Securities acted as lead financial advisor to SES.
Morgan Stanley & Co. LLC acted as co-financial advisor.
Deutsche Bank Securities Inc also acted as a financial advisor.
Morgan Stanley and Deutsche Bank AG, Filiale Luxembourg are
providing committed financing for the transaction. Both Guggenheim
Securities and Morgan Stanley & Co. LLC rendered a fairness
opinion to SES’s Board of Directors. Gibson, Dunn & Crutcher,
Arendt & Medernach, Hogan Lovells, and Freshfields served as
legal counsel to SES.
PJT Partners served as financial advisor to Intelsat and
rendered a fairness opinion to the Intelsat S.A. Board of
Directors. Skadden, Arps, Slate, Meagher & Flom, and Elvinger
Hoss Prussen served as legal counsel to Intelsat.
Financial information presented in this press release
Accounting recognition and measurement principles: SES financial
information presented using the recognition and measurement
principles of International Financial Reporting Standards (IFRS).
Intelsat financial information uses those of U.S. Generally
Accepted Accounting Principles (GAAP). The financial information
presented for SES and Intelsat does not apply a consistent set of
accounting policies.
Currency conversion: all financial numbers based on an assumed
foreign exchange (FX) rate of €1: $1.09. Pro forma financial
information are aggregations of the corresponding SES and Intelsat
financial information, adjusted for the elimination of material
intra-group transactions. Financial Outlook information is
conditional on nominal satellite health and nominal launch
schedule.
The following Additional Performance Metrics (APMs) are used:
“Adjusted EBITDA” is reported EBITDA excluding significant special
items as defined by SES and Intelsat respective managements,
including (but not necessarily limited to) reorganisation costs and
the impact of U.S. C-Band repurposing; “Gross Debt” represents
current and non-current borrowings plus 50% of perpetual hybrid
bonds; “Adjusted Net Debt” represents current and non-current
borrowings plus 50% of perpetual hybrid bonds, less cash & cash
equivalents; “Net Leverage” refers to Adjusted Net Debt divided by
Adjusted EBITDA; “Capital Expenditure (CapEx)” represents net cash
absorbed by investing activities excluding acquisitions, financial
investments, and U.S. C-band repurposing; and “Gross Backlog”
represents expected future revenue under existing customer
contracts and includes both cancellable and non-cancellable
contracts.
Presentation for investors and analysts:
A presentation of the transaction for investors and analysts
will be hosted at 9.30 CEST on 30 April 2024 and will be broadcast
via webcast and conference call. The details for the conference
call and webcast are as follows:
U.K.
+44 (0) 33 0551 0200
France
+33 (0) 1 70 37 71 66
Germany
+49 (0) 30 3001 90612
U.S.A.
+1 786 697 3501
Confirmation code
SES
Webcast registration
https://channel.royalcast.com/landingpage/ses/20240430_2/
The presentation is available for download from
https://www.ses.com/investors/financial-results and a replay will
be available shortly after the conclusion of the presentation.
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About SES
SES has a bold vision to deliver amazing experiences everywhere
on earth by distributing the highest quality video content and
providing seamless data connectivity services around the world. As
a leader in global content connectivity solutions, SES owns and
operates the world’s only geosynchronous orbit and medium earth
orbit (GEO-MEO) constellation of satellites with the unique
combination of global coverage and high performance. By leveraging
its vast and intelligent, cloud-enabled network, SES delivers
high-quality connectivity solutions anywhere on land, at sea or in
the air, and is a trusted partner to the world’s leading
telecommunications companies, mobile network operators,
governments, connectivity and cloud service providers,
broadcasters, video platform operators and content owners. SES’s
video network carries over 6,400 channels, reaching 363 million
households, delivering managed media services for both linear and
non-linear content. The company is headquartered in Luxembourg and
listed on Paris and Luxembourg stock exchanges (Ticker: SESG).
Further information is available at: www.ses.com.
About Intelsat
Intelsat’s global team of professionals is focused on providing
seamless and secure, satellite-based communications to government,
non-governmental organisations, and commercial customers through
the company’s next-generation worldwide network and managed
services. Bridging the digital divide by operating one of the
world’s largest and most advanced satellite fleet and connectivity
infrastructures, Intelsat enables people and their tools to speak
over oceans, see across continents and listen through the skies to
communicate, cooperate, and coexist. Since its founding six decades
ago, the company has been synonymous with satellite industry
“firsts” in service to its customers and the planet. Leaning on a
legacy of innovation and focusing on addressing a new generation of
challenges Intelsat team members now have their sights on the “next
firsts” in space as they disrupt the field and lead in the digital
transformation of the industry.
Forward looking statements
This communication contains forward-looking statements.
Generally, the words “anticipate,” “estimate,” “expect,” “project,”
“intend,” “plan,” “contemplate,” “predict,” “forecast,” “likely,”
“believe,” “target,” “will,” “could,” “would,” “should,”
“potential,” “may” and similar expressions or their negative, may,
but are not necessary to, identify forward-looking statements.
Such forward-looking statements, including those regarding the
timing and consummation of the transaction described herein,
involve risks and uncertainties. SES’s and Intelsat’s experience
and results may differ materially from the experience and results
anticipated in such statements. The accuracy of such statements is
subject to a number of risks, uncertainties and assumptions
including, but not limited to, the following factors: the risk that
the conditions to the closing of the transaction are not satisfied,
including the risk that required approvals of the transaction from
the shareholders of Intelsat or from regulators are not obtained;
litigation relating to the transaction; uncertainties as to the
timing of the consummation of the transaction and the ability of
each party to consummate the transaction; risks that the proposed
transaction disrupts the current plans or operations of SES or
Intelsat; the ability of SES and Intelsat to retain and hire key
personnel; competitive responses to the proposed transaction;
unexpected costs, charges or expenses resulting from the
transaction; potential adverse reactions or changes to
relationships with customers, suppliers, distributors and other
business partners resulting from the announcement or completion of
the transaction; the combined company’s ability to achieve the
synergies expected from the transaction, as well as delays,
challenges and expenses associated with integrating the combined
company’s existing businesses; the impact of overall industry and
general economic conditions, including inflation, interest rates
and related monetary policy by governments in response to
inflation; geopolitical events, and regulatory, economic and other
risks associated therewith; and continued uncertainty around the
macroeconomy. Other factors that might cause such a difference
include those discussed in the prospectus on Form F-4 to be filed
in connection with the proposed transaction. The forward-looking
statements included in this communication are made only as of the
date hereof and, except as required by federal securities laws and
rules and regulations of the SEC, SES and Intelsat undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Additional Information and Where to Find It
In connection with the proposed transaction, SES intends to file
with the SEC a registration statement on Form F-4 that also
constitutes a prospectus of SES. SES also plans to file other
relevant documents with the SEC regarding the proposed transaction.
No offer of securities shall be made, except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended. INVESTORS AND SHAREHOLDERS ARE URGED TO
READ THE REGISTRATION STATEMENT, PROSPECTUS AND OTHER DOCUMENTS
THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF
AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
shareholders will be able to obtain free copies of these documents
(if and when available), and other documents containing important
information about SES and Intelsat, once such documents are filed
with the SEC through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
SES will be available free of charge on SES’s website at
www.ses.com or by contacting SES’s Investor Relations Department by
email at ir@ses.com. Copies of the documents filed with the SEC by
Intelsat will be available free of charge on Intelsat’s website at
www.intelsat.com or by contacting Intelsat’s Investor Relations
Department by email at investor.relations@intelsat.com.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction. No offer of securities shall
be made, except by means of a prospectus meeting the requirements
of Section 10 of the Securities Act of 1933, as amended.
______________________________
All financial information in this press release is stated using
a foreign exchange (FX) rate of €1: $1.09.
1) Pro forma (combined) revenue (2024E) and gross backlog (at 31
December 2023) is adjusted to eliminate intercompany transactions.
2024E Adjusted EBITDA includes Intelsat non-cash revenue of ~€175
million. Financial outlook assumes nominal satellite launch
schedule and nominal satellite health status.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429202060/en/
Richard Whiteing SES Investor Relations Tel: +352 710 725 261
richard.whiteing@ses.com
Suzanne Ong SES External Communications Tel: +352 710 725 500
suzanne.ong@ses.com
Clay McConnell Intelsat Communications Tel +1 571 419 9305
Clay.mcconnell@Intelsat.com
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