Satellite operator Inmarsat won’t make an offer for rival Avanti
Inmarsat won't be making an offer for Avanti, it's said today following media reports that the two could come together in a £4bn takeover.
The satellite operator – recently expelled from the blue-chip FTSE 100 index – put an end to speculation begun by Sky News on Friday that it was considering making a bid for its smaller rival.
In a statement the firm said:
Inmarsat confirms that it was contacted by Avanti's advisers following the announcement by that company of a strategic review and formal sale process on 11 July 2016, and responded to that contact.
Inmarsat confirms it has withdrawn from Avanti's announced process and it is not considering an offer for the shares of Avanti.
The statement gave no clue as to why Inmarsat – which, with a market cap of £3.5bn, dwarfs its smaller rival Avanti's £40m – chose to walk away from the talks.
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Both companies have come under pressure recently due to increased competition from lower cost, high-capacity systems.
Shares in Inmarsat have fallen by around a third since January, while Avanti shares are off by almost 90 per cent over the last 10 months.
In May Inmarsat revealed profits before tax fell to $58.5m (£40.3m) for the three months ended March 2016, compared with $96.3m the year before.
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It also lowered its full-year revenue forecast by $50m to the $1.175bn to $1.25bn range, citing a slowdown in maritime and energy markets.
While both firms operate satellites Inmarsat predominantly provides broadband services for boats, planes and remote land locations, while Avanti provides an alternative to underground broadband infrastructure in Africa and other regions.