French satellite company Eutelsat Communications and OneWeb shareholders have signed an MoU to merge both companies in an all-share transaction.
As a part of the agreement, Eutelsat will combine its 36-strong fleet of GEO satellites with OneWeb’s constellation of 648 low Earth orbit satellites, of which 428 are currently in orbit.
230M new shares
Shareholders of OneWeb, valued at $3.4B under the transaction, will get new shares issued by Eutelsat in exchange for their shares in a 100% takeover.
As a result, OneWeb shareholders would receive 230M newly issued Eutelsat shares representing 50% of the enlarged share capital.
With this merger, Eutelsat and OneWeb will address the Connectivity market opportunity, fuelled by customers’ growing needs in both the B2B and B2C segments for consistent, reliable connectivity.
These market segments are forecast to grow by three and five times over the next decade to reach a combined value of circa $16B by 2030.
The combination of Eutelsat with OneWeb is forecast to generate average annual revenue synergies estimated at circa €150M after four years, with hybrid GEO/LEO offerings providing a premium service to customers and improving the fill rate.
Dominique D’Hinnin, Eutelsat’s Chairman, says, “I am delighted to announce this new and significant step in the collaboration between Eutelsat and OneWeb. Bringing together our two businesses will deliver a global first, combining LEO constellations and GEO assets to seize the significant growth opportunity in connectivity and deliver our customer’s solutions to their needs across an even wider range of applications. This combination will accelerate the commercialisation of OneWeb’s fleet while enhancing the attractiveness of Eutelsat’s growth profile. In addition, the combination carries significant value creation potential, anchored on a balanced mix of revenue, cost, and capex synergies. The strong support of strategic shareholders of both parties is a testament to the huge opportunity that this combination offers and the value that will be created for all its stakeholders. This is truly a game changer for our industry.”
Sunil Bharti Mittal, OneWeb’s Executive Chairman says, “Having played a pioneering role in providing connectivity in the emerging world, I am excited about the possibilities of connecting the unconnected. The combination of Eutelsat and OneWeb represents a significant development in that direction as well as a unique GEO/LEO combination. The positive early results of our service, together with our strong pipeline, represent a very exciting opportunity in the fast-growing satellite connectivity segment, especially for customers requiring a high-speed, low latency experience. Our customers are actively seeking a combined GEO/LEO offering leading us towards this important step. Bharti, as the lead shareholder of OneWeb, along with other key shareholders, is looking forward to playing a meaningful role in providing expanded connectivity through the combination of OneWeb and Eutelsat.”
Eva Berneke, Eutelsat’s Chief Executive Officer says, “Our initial investment in OneWeb was underpinned by our strong belief that the future growth in connectivity will be driven by both GEO and LEO capacity. This belief has intensified as our relationship with OneWeb has deepened, first by raising our stake in the company and then with the global distribution agreement signed a few months ago. We are now moving to the next level with a full combination that will ensure the potential of the GEO/LEO integration is fully realized, supported by compelling financial, strategic, and industrial logic. This ground-breaking combination will create a powerful global player with the financial strength and technical expertise to accelerate both OneWeb’s commercial deployment and Eutelsat’s pivot to connectivity. The combined entity will be geared towards profitable growth, with strong medium-term cash flow generation and a rapid deleveraging driven by strong forecast EBITDA growth. The benefits for our customers and strategic partners, who are at the centre of our strategy, are both significant and unique. This is also a very exciting opportunity for our employees who will be key to the success of this transformation.”
Neil Masterson, OneWeb’s Chief Executive Officer says, “Just 20 months ago, OneWeb resumed its mission to connect the unconnected and remove the barriers to connectivity that hold back many of the world’s underserved economies and communities. Since then, we have turned this vision into reality and become the second largest low Earth orbit satellite operator in the world. Today’s announcement is another bold step in OneWeb’s remarkable journey. It is a testament to the resilience, execution, and innovation of our teams, the strong demand we have seen since launching our commercial services, and the close collaboration we have forged with our partners to provide high-speed, low latency connectivity for governments, businesses, and communities. This combination accelerates our mission to deliver the connectivity that will change lives at scale and create a fast-growing, well-funded company that will continue to create significant value for our shareholders.”
