Paris-based SES buys Intelsat for $3.1 billion as European satellite companies consolidate

Paris-based satellite giant SES has struck a deal to acquire Intelsat Holdings for $3.1 billion in debt, a move poised to catapult the combined company into a major European player in the space industry.

However, the merger has stirred some concerns among investors, particularly regarding the substantial debt it entails. Intelsat, having emerged from bankruptcy just two years ago, adds a complex layer to the financial dynamics.

The agreement, greenlit unanimously by both companies’ boards, is slated to be finalized in the latter half of 2025. Financing for the deal will be a blend of cash and fresh debt, including hybrid bonds, according to statements from the companies.

“SES S.A. (“SES”) and Intelsat S.A. (“Intelsat”) announce an agreement for SES to acquire Intelsat through the purchase of 100% of the equity of Intelsat Holdings S.a.r.l. for a cash consideration of $3.1 billion (€2.8 billion) and certain contingent value rights,” SES said in a press release.

The backdrop of this deal is the intensifying competition in the satellite sector, notably with SpaceX’s rapid ascent and Amazon’s ambitious Project Kuiper. European firms are feeling the pressure to consolidate to stand a chance against heavyweights like Elon Musk’s Starlink.

While the move toward consolidation has received nods of approval from analysts, there’s skepticism about its efficacy in narrowing the gap with U.S. rivals, especially given SES’s potential debt burden. This skepticism has taken a toll on SES’s Paris-listed shares, plunging by as much as 12% to a record low of 4.36 euros.

The combined entity, as per company statements, would boast a fleet exceeding 100 geostationary Earth orbit (GEO) and 26 medium Earth orbit (MEO) satellites. Nonetheless, this pales in comparison to the approximately 5,800 satellites orbiting under Starlink’s banner, as reported by space.com.

“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, according to a report from Reuters.

SES and Intelsat had flirted with the idea of merging previously, but talks fizzled out in 2023. Now, SES CEO Adel Al-Saleh attributes the renewed interest to a smoother regulatory path for acquisition versus merger, coupled with Intelsat’s fresh start post-bankruptcy.

The headquarters of the new conglomerate will be stationed in Luxembourg, with a significant presence retained in the United States, according to the joint statement. The anticipated synergy from this union is estimated at a net present value of 2.4 billion euros ($2.58 billion).