Intelsat Ltd. of Washington plans to buy PanAmSat Holding Corp. for $3.2 billion in cash in a deal that would form the world's largest satellite company, and give the companies a bigger global footprint and a more diversified set of businesses.
The merger agreement, signed yesterday, would create a company with 53 satellites spanning the globe and annual revenue of more than $1.9 billion.
"It will be a world-class company" with complementary business strengths, said Intelsat chief executive David McGlade, who is to retain his title after the merger closes in six to 12 months. Joseph Wright Jr., chief executive of Wilton, Conn.-based PanAmSat, is to become chairman of the new company.
PanAmSat, which employs about 600 people, has a big business carrying broadcast television transmissions and has a greater presence in North America than Intelsat. Intelsat, which started selling satellite telephone service in 1964, does more business with the U.S. government than PanAmSat and has a stronger fleet of satellites internationally.
The merger has been approved by both companies' boards of directors, but requires approval from PanAmSat's shareholders, as well as from U.S. antitrust regulators and the Federal Communications Commission.
The combined company's administrative headquarters are to remain in Washington, where Intelsat employs the bulk of its 800 workers. Its corporate headquarters will remain in Bermuda.
The Intelsat-PanAmSat deal is the latest in a series of satellite mergers in recent years. PanAmSat was bought last year by a group of private equity firms, which then sold 40 percent of the company to the public.
In 2001, Luxembourg-based satellite firm SES Astra bought GE Americom for $5 billion, which formed the then-largest satellite firm, SES Global. Intelsat was bought by a group of four private-equity investment firms in January, and after the merger the company will be equally owned by Apollo Management, Madison Dearborne Partners, Apax Partners and Permira Partners.
Having global reach and a diverse customer base will make both firms stronger, Wright said. Although the company expects to cut back on its combined spending, he declined to estimate how many of the 1,400 combined jobs might be eliminated because of the merger.