US-based satellite operator OneWeb, backed by telecoms group SoftBank, will not go ahead with a $14bn merger with its Luxembourg-based, Nasdaq-listed peer Intelsat, Reuters reported yesterday.
The deal collapsed when SoftBank, which had planned to invest $1.7bn in the combined entity in return for a 39.9% stake, could not get enough of Intelsat’s creditors on board. The transaction had hinged on Intelsat’s creditor accepting a discount for their bonds.
OneWeb and Intelsat extended the tender offer period for creditors three times and offered better terms, but they will not provide another extension. However, unnamed sources have told Reuters that some creditors could make a last-ditch attempt today to save the deal.
Establioshed in 2012, OneWeb is building a network of hundreds of low earth orbit satellites that will provide internet coverage across the world. The company said the service will offer “industry- leading speed and performance” as well as lower latency, at an affordable price.
In December last year, SoftBank decided to invest $1bn in OneWeb as part of a $1.2bn round that included Intelsat, semiconductor company Qualcomm, aerospace group Airbus, beverage producer Coca-Cola, conglomerates Virgin and Bharti Enterprises, cable and internet service provider Totalplay, as well as satellite services company Hughes Network Systems.
In June 2015, Intelsat, Airbus, Virgin, Bharti, Qualcomm, Coca-Cola, Intelsat, Hughes Network and Totalplay invested $500m in OneWeb, after Virgin and Qualcomm had supplied the company’s initial funding the previous January.
SoftBank has reportedly entered talks with other potential merger partners for OneWeb, though the corporate’s equity investments were based on the assumption that OneWeb has significant potential as a stand-alone business.