OneWeb, which escaped bankruptcy in 2020, hopes that its combination with Eutelsat will help turn its fate around.
Jody Amiette | AFP via Getty Images
With the merger of all shares, Eutelsat will issue 230 million new shares to exchange for all remaining shares of OneWeb. press release Tuesday.
OneWeb and Eutelsat shareholders each own 50% of the merged company. The deal values OneWeb at $ 3.4 billion.
The combined entities are expected to generate approximately € 1.2 billion ($ 1.22 billion) in revenue in the 2022-23 fiscal year, the two companies said.
Eutelsat’s Dominique D’Hinnin and Eva Berneke will continue their respective roles as Chairman and CEO of the Integrated Entity, co-chaired by OneWeb supporter Sunil Bharti Mittal.
Eutelsat Chairman D’Hinnin said the deal would help companies “seize significant growth opportunities for connectivity.”
“This combination will accelerate the commercialization of OneWeb’s fleet while enhancing the appeal of Eutelsat’s growth profile,” he added.
OneWeb wants to distribute 648 low earth orbit satellites to help beam broadband to rural areas with restricted internet access. Currently, there are 428 satellites in orbit, combined with a fleet of 36 powerful geostationary satellites in Eutelsat.
With OneWeb, which has long been touted as a competitor to SpaceX’s giant Starlink satellite Internet project Amazon His Project Kuiper faces difficulties in turning its high ambitions into a viable economic model.
With the support of the British government, the company broke out of bankruptcy in 2020 and ran out of billions of dollars in venture capital. The government kicked $ 500 million as part of the company’s bailout package.
The startup was also affected by the freeze on rocket launches from Russia after Moscow’s invasion of Ukraine. I was forced to look at SpaceX For support.
OneWeb hopes the combination with Eutelsat will help turn its fate around, and CEO Neil Masterson calls it “another bold step” in supporting the company’s mission.
“This combination accelerates our mission to provide connectivity to create a fast-growing, well-funded company that will change our lives on a large scale and continue to create great value for our shareholders,” Master said. Son said.
Investors don’t seem to be convinced of Tuesday’s acquisition, with Eutelsat shares trading at its lowest level since late 2020. Eutelsat said it will temporarily suspend dividends to focus on deploying OneWeb’s satellite constellation.
The transaction is subject to various regulatory approvals, including a rigorous national security clearance process in the United Kingdom. It is scheduled to be completed by the first half of 2023.
The transaction does not include a “special share” held by the UK Government that gives a say on national security issues, such as OneWeb’s network security standards and headquarters location.
London is diluting its former space venture dominance during periods of political instability. Members of the ruling Conservative Party will decide who will be the next British leader after the resignation of Prime Minister Boris Johnson.
Tory followers should want a prime minister who can protect Britain’s valuable assets from foreign acquisitions, especially those from the EU, in the wake of Brexit.
Under the terms of the agreement, OneWeb will continue to trade under the existing name and is headquartered in the United Kingdom. Eutelsat is listed on the Paris and will be additionally listed on the London Stock Exchange.
However, the transaction is also expected to add the government to Eutelsat’s unique shareholder registry, which includes the state of China.It can frown among Britain’s closest allies, especially the United States
Eutelsat had already invested in OneWeb last year as part of a post-bailout funding round.Other OneWeb backers include Indian tycoon Sunil Bharti Mital and Japanese technology investors Softbank..