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Government intervenes in Inmarsat deal on national security grounds

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Government intervenes in Inmarsat deal on national security grounds
A pictures shows the offices of satellite operator Inmarsat in central London on March 25, 2014. Inmarsat said it managed to work out which direction the missing Malaysia Airlines plane flew in by measuring the Doppler effect of hourly 'pings' from the aircraft. Malaysia's prime minister announced earlier that the Inmarsat analysis of flight MH370's path placed its last position in remote waters off Australia's west coast, meaning it can only have run out of fuel above the southern Indian Ocean. AFP PHOTO / LEON NEAL (Photo credit should read LEON NEAL/AFP/Getty Images)

The UK government is to investigate the sale of London-listed satellite company Inmarsat to a private-equity and pension fund group on national security grounds, it said today.

Read more: Inmarsat bidders look to appease government

Inmarsat, Britain’s biggest satellite company, agreed in March to be bought by an international group including buyout firms Apax and Warburg Pincus in a $3.4bn (£2.7bn) deal that would take it private 15 years after it floated.

But culture secretary Jeremy Wright today instructed the Competition and Markets Authority (CMA) to investigate the national security implications of the deal.

As is common with large deals, the CMA had already launched a merger inquiry to ensure it complied with competition laws, but the watchdog’s investigation has now been expanded.

“The CMA has until midnight on 17 September 2019 to complete and submit this report to the secretary of state,” a government statement said.

If completed, the takeover of the British satellite operator would be the second largest public-to-private deal ever in the UK.

A person with knowledge of the deal said the government’s decision was not a surprise given the size of Inmarsat and its role in developing military technology, and should not disrupt the timeline for the deal.

Today’s announcement came a week after the group of buyers made a number of commitments, unconnected to the CMA investigation, in what was seen as an attempt to appease the government.

The consortium said it will guarantee that the majority of key strategic decisions will be taken in the UK and will keep key parts of Inmarsat’s global operations in the country.

The private equity offer, with amounts to $7.21 per share, comes after a series of takeover bids fell through during a time when Inmarsat under-performed.

Read more: Competition watchdog to probe $3.4bn Inmarsat takeover

US satellite rival Echostar ditched its bid last year after tabling an unsuccessful £3.2bn offer. Shares in Inmarsat closed today at 562.4p, or $7.02.