The bidding war to acquire control of Intelsat, the world's largest satellite operator, has been won by international private equity firm BC Partners.
While the auction for Intelsat was kicked off by a bid from Blackstone Group in April and subsequently drew interest from several other private equity firms as well as a joint bid from Liberty Media and EchoStar, a group led by BC Partners and "certain other investors" has agreed to acquire 76% of the shares of parent company Intelsat Holdings in a deal that values the company's equity at $5.03 billion.
Taking into account Intelsat's $11.4 billion of debt as of March 31, 2007, the enterprise valuation implied by the transaction is approximately $16.4 billion.
Intelsat's current shareholders of Intelsat, including funds advised by Apax Partners, Apollo Management, Madison Dearborn Partners, Permira and management, will receive roughly $4.6 billion in cash upon closing of the deal, which is expected in the next six to nine months, and will continue to hold approximately 24% of the primary ownership of Intelsat Holdings, Ltd. The complicated transaction will retire some of Intelsat's previous debt obligations while adding some $3.85 billion in total debt; BC Partners has obtained financing commitments from investment banks Credit Suisse, Banc of America Securities and Morgan Stanley for $5.11 billion to help finance the deal.
"This transaction highlights the significant value that Intelsat has created for its shareholders and the tremendous opportunities the business and employees will enjoy going forward," said David McGlade, who will remain Intelsat CEO, in a statement. "The company has thrived under private equity ownership, including the 2006 completion of the transformative PanAmSat combination that firmly established Intelsat's global leadership position. As a result, we have a keen appreciation for the financial and strategic support that a firm such as BC Partners can provide. We are confident that they will continue to endorse Intelsat's objectives for revenue growth and operating improvements."
