SES Global Makes Offer For Israel’s Spacecom

By | January 24, 2008 | Satellite News Feed

[Satellite Today – 1-24-08]  SES Global, the world’s second largest communications satellite operator, has made a bid to acquire Israel’s Space-Communication Ltd. (Spacecom), both SES and Spacecom have confirmed to Satellite Today.

Spacecom operates the Amos-1 and Amos-2 satellites, which are co-located at 4° West to provide direct broadcast satellite services, digital TV distribution to cable headends, video services to broadcasters and communications services to government entities. Amos-2 also offers a beam to the U.S. East Coast, creating a vital link for VSAT operators, government agencies and other service providers.

Spacecom is publicly traded on the Tel Aviv stock exchange, and its major shareholders include IAI Eurocom, General Satellite Services Co. and Mer Services Group. “It is a complex offer and we will take our time when studying it,” Motty Slomovitz, vice president of marketing and sales at Spacecom, told Satellite Today.

SES Global Makes Offer For Israel’s Spacecom

[Satellite News – 1-24-08] SES Global, the world’s second largest communications satellite operator, has made a bid to acquire Israel’s Space-Communication Ltd. (Spacecom), both SES and Spacecom have confirmed to Satellite News.

    Spacecom operates the Amos-1 and Amos-2 satellites, which are co-located at 4° West to provide direct broadcast satellite services, digital TV distribution to cable headends, video services to broadcasters and communications services to government entities. Amos-2 also offers a beam to the U.S. East Coast, creating a vital link for VSAT operators, government agencies and other service providers.

    Spacecom also has sold more than 50 percent of the total capacity on its Amos-3 satellite, which is slated for launch in March, and in July, Spacecom signed a contract with Israel Aerospace Industries (IAI) to manufacture Amos-4.

    Sarah Simon, a media equity analyst at Morgan Stanley said in a research note that no details of the offer have been made public, but the market capitalization of Spacecom is about 100 million euros ($146.6 million), and the company also had about 125 million euros ($182.5 million) of net debt at the end of 2006. “This thus looks like the exact type of deal envisaged by SES management in recent months,” she said. “Commentary regarding [merger and acquisition] has focused on the attractions of small- to medium-sized add-on transactions, which would allow SES to improve its geographic reach by filling in coverage gaps.”

    Eric Beaudet, a satellite equity analyst at Nataxis Securities, told Satellite News, “I am not surprised that they would be interested in an acquisition like this. It is now all about the price,” he said. “We have seen in Mexico, that both SES and Eutelsat are quite careful on prices. They want to make sure they don’t overpay. We will see how this pans out. The best assets in this industry are orbital positions, and the best way to acquire them is through small acquisitions.”

    Spacecom is publicly traded on the Tel Aviv stock exchange, and its major shareholders include IAI Eurocom, General Satellite Services Co. and Mer Services Group. “It is a complex offer and we will take our time when studying it,” Motty Slomovitz, vice president of marketing and sales at Spacecom, told Satellite News.

    If the SES bid is successful, the move would strengthen the company’s position in Eastern Europe, potentially a key factor behind the deal. In December, Spacecom unveiled new capacity deals in Hungary, Slovenia and Romania.

     “Amos is strong in the Middle East market as well as in Central Europe, where it has clients in Romania, Hungary and Poland,” Simon said. “Given SES’ strong track record in terms of integrating acquisitions and extracting synergies — the New Skies deal was extremely successful — we believe a transaction of this nature could be value creating for SES. We note that Spacecom’s [earnings before interest and tax] margin in 2006 was 20 percent, or half that of SES. In our view, this implies considerable margin expansion potential.”

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