£2.6bn deal by private equity consortium approved

The UK government has given its approval for the £2.6bn takeover bid for Inmarsat, the UK’s largest satellite company, to go ahead. Inmarsat is a leading player in the maritime communications sector, including yachting where it is currently looking to grow its involvement.

The bid – made in March this year by the Connect Bidco consortium, which included the private equity buyout companies of Apax Partners from the UK and Warburg Pincus from the US – was subject to an investigation by the UK’s Competition & Markets Authority (CMA) because of national security concerns. A number of Inmarsat services are used by the UK Ministry of Defence.

In response to the concerns, Connect Bidco gave voluntary undertakings to address and safeguard any doubts the UK government might have. These undertakings relate also to a guarantee the retention in the UK of a major part of Inmarsat’s operations and also the making of key strategic decisions. Under the takeover deal, Inmarsat, which has been listed on the London Stock Exchange, will be taken private.

Nicky Morgan, the UK Secretary of State for Digital, Culture, Media and Sport, commented: “The undertakings provide assurance that sensitive information is protected and that enhanced security controls are in place to ensure the continued supply of key services used by the Ministry of Defence.”

Another deal that has raised similar concerns is the £4bn takeover bid for Cobham plc which, like Inmarsat, is actively involved in the yachting communications and electronics sector. The CMA’s report following an investigation into this deal was presented to the UK Business Secretary of State, Andrea Leadsom, yesterday.