Satellite pioneer Intelsat said yesterday it is acquiring PanAmSat for $3.2 billion in a deal that would add a top cable-TV broadcaster...
NEW YORK — Satellite pioneer Intelsat said yesterday it is acquiring PanAmSat for $3.2 billion in a deal that would add a top cable-TV broadcaster to Intelsat’s dominant position as the biggest provider of space-based data and voice communications for governments and businesses.
Intelsat, created in 1964 through a partnership of 147 nations and then privatized in 2001, also will assume $3.2 billion of debt from PanAmSat in the deal, the companies said.
The proposed merger would nearly double Intelsat’s satellite fleet to 53 spacecraft, creating a company with $1.9 billion in annual revenues.
A former unit of DirecTV, PanAmSat’s satellites still are used to deliver DirecTV’s cable service and other direct broadcast TV services to about 125 million households, primarily in North and South America.
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The company, based in Wilton, Conn., was acquired more than a year ago in a $3.4 billion buyout led by Kohlberg Kravis Roberts. This past March, PanAmSat went public again with an initial public offering of 50 million shares priced at $18 a share.
Intelsat has agreed to pay $25 a share, representing a 28 percent increase from the IPO and a 26 percent premium over last week’s closing quote for PanAmSat’s shares, which yesterday jumped $4, or 20 percent, to close at $23.80.
While the deal would combine two of the industry’s biggest players, executives for the companies asserted the merger wouldn’t hurt competition because Intelsat and PanAmSat are strong in different regions and types of services.
They also echoed an argument voiced repeatedly in the telephone industry this year with SBC Communications’ purchase of AT&T and Verizon’s purchase of MCI: The mounting competition between cable, phone, wireless and satellite providers more than makes up for the loss of an individual competitor in any one of those markets.
“The satellite business is not a big part of the communications business,” said PanAmSat Chief Executive Joseph Wright, slated to become chairman of the combined company. “Our biggest competition is really coming from fiber and other companies that are delivering a lot more signal than we are.”
The executives also said there’s excess satellite capacity in the market, with both companies currently using less than three-quarters of their transmission capabilities.
Intelsat Chief Executive David McGlade, who will be CEO of the merged company, said, “We feel we’re in a position where we’re not going to have to divest satellites” to gain regulatory clearance for the deal.