Satellite firm SES to buy Intelsat for $3.1 billion, debt concerns sink shares

Satellite firm SES to buy Intelsat for $3.1 billion, debt concerns sink shares

By Olivier Sorgho

(Reuters) – Satellite company SES has agreed to buy Intelsat Holdings for $3.1 billion in a deal that would create a major European player but raised investor concerns around debt, sending the buyer’s shares to a record low.

European satellite companies have been looking to consolidate to better compete with the likes of Elon Musk’s Space X-owned Starlink, and Amazon’s Project Kuiper.

While a move to gain scale was welcomed by analysts, concerns it might not do much to close the gap with U.S. rivals, while saddling SES with debt, sent its Paris-listed shares down as much as 12% to 4.36 euros, its lowest price ever.

The shares lost around 20% since a media report about renewed merger talks with Intelsat broke on Monday afternoon.

The new company would have a fleet of more than 100 geostationary Earth orbit (GEO) and 26 medium Earth orbit (MEO) satellites, the two companies said in a statement. That, however, compares with about 5,800 satellites that Starlink has in orbit, according to space.com.

The deal, unanimously approved by the two companies’ boards, should close in the second half of 2025 and will be financed by cash and new debt, including hybrid bonds, the companies said.

“The combined entity risks suffering from relatively high leverage, precisely at a time when traditional operators are grappling with escalating cost of debt and diminishing capital returns,” analyst Antoine Lebourgeois at Bryan Garnier said.

SES and Intelsat, which emerged from bankruptcy in 2022, had held merger talks before but those collapsed in mid-2023.

Asked what had changed since then, SES’ CEO Adel Al-Saleh told analysts that an acquisition was easier to clear from the regulatory point of view than a merger, while Intelsat’s emergence from bankruptcy was also a factor.

The new company would be headquartered in Luxembourg, and maintain a significant presence in the United States, the companies’ statement said.

The combination will bring synergies estimated at a net present value of 2.4 billion euros ($2.58 billion), they said.

($1 = 0.9318 euros)

(Reporting by Olivier Sorgho; Editing by Alex Richardson, Kirsten Donovan and Tomasz Janowski)