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Intelsat and OneWeb Startup to Merge, Raise $1.7B New Equity from SoftBank

Intelsat and OneWeb Startup to Merge, Raise $1.7B New Equity from SoftBank

in December 2016, SoftBank agreed to invest $1 billion in OneWeb to support the technological development and the construction of the world’s first and only high volume satellite production facility to further accelerate OneWeb’s vision of delivering affordable, high-speed, low latency internet to rural and remote communities around the world. Intelsat was a founding investor in OneWeb, making a minority equity investment in 2015. The complementary strengths of Intelsat and OneWeb, combined with the investment by SoftBank, are intended to create a financially stronger company with the flexibility to aggressively pursue new growth opportunities resulting from the explosion in demand for broadband connectivity for people and devices everywhere. Stephen Spengler, Chief Executive Officer of Intelsat, said, “We believe that combining Intelsat with OneWeb will create an industry leader unique in its ability to provide affordable broadband anywhere in the world. As an early equity investor in OneWeb, we recognized a network that was a complement to our next-generation Intelsat EpicNG fleet and a fit with our long-term strategy. By merging OneWeb’s LEO satellite constellation and innovative technology with our global scale, terrestrial infrastructure and GEO satellite network, we will create advanced solutions that address the need for ubiquitous broadband. The transaction, including SoftBank’s investment, will significantly strengthen Intelsat’s capital structure and accelerate our ability to unlock new applications, such as connected vehicles, as well as advanced services for our existing customers in the enterprise, wireless infrastructure, mobility, media and government sectors, while also reducing execution and other risks.” Greg Wyler, Founder and Executive Chairman of OneWeb, said, “OneWeb has made incredible technical progress over the past year, and has itself attracted significant investment from SoftBank. With SoftBank’s support we will build the world’s first truly global broadband company, accelerating our mission of bridging the digital divide by connecting the four billion people without access today. While there are numerous growth paths available to OneWeb, we are very excited at the prospect of working with Intelsat on this shared objective.” Masayoshi Son, Chairman and CEO of SoftBank, said, “We are in the midst of a technological revolution and, provided we receive the necessary cooperation from Intelsat bondholders, we welcome the opportunity to support OneWeb as it creates the foundation for next-generation global internet services anywhere on the planet. This combination is consistent with SoftBank’s strategy of investing in disruptive, foundational technologies that are building the infrastructure for tomorrow, and this proposal offers a win-win opportunity to accelerate OneWeb’s mission while enhancing the Intelsat balance sheet.” The combined company will remain domiciled in Luxembourg, and continue to be listed on the New York Stock Exchange. The combined company, through its subsidiaries, expects to maintain a significant presence in the United States, including at OneWeb’s new manufacturing facility in Exploration Park, Florida, and at Intelsat’s United States facilities in McLean, Virginia. The Board of Directors of the combined company will be made up of seven directors, including three independent directors, three members selected by SoftBank and one director selected by a current Intelsat shareholder. Intelsat’s CEO, Stephen Spengler, will be the CEO of the combined company. OneWeb’s Founder and Executive Chairman, Greg Wyler, will be the Executive Chairman of the combined company’s Board of Directors. The combination agreement has been approved by the boards of directors of Intelsat and OneWeb. Both the merger and the SoftBank investment are subject to completion of debt exchange offers to certain existing Intelsat bondholders, as well as receipt of certain regulatory approvals and other conditions. The deal is expected to close late in the third quarter of 2017. Guggenheim Securities, LLC and Goldman, Sachs & Co. acted as financial advisors and Wachtell, Lipton, Rosen & Katz and Elvinger Hoss and Prussen provided legal counsel to Intelsat. PJT Partners acted as lead financial advisor to OneWeb and also advised SoftBank. Barclays acted as a financial advisor to OneWeb and rendered a fairness opinion. Morrison & Foerster LLP, Arendt and Medernech, and Mourant Ozannes provided legal counsel to OneWeb and SoftBank, and Choate Hall & Stewart LLP and Milbank, Tweed, Hadley & McCloy provided legal counsel to OneWeb. Intelsat operates the world’s first Globalized Network, delivering high-quality, cost-effective video and broadband services anywhere in the world. Intelsat’s Globalized Network combines the world’s largest satellite backbone with terrestrial infrastructure, managed services and an open, interoperable architecture to enable customers to drive revenue and reach through a new generation of network services. Thousands of organizations serving billions of people worldwide rely on Intelsat to provide ubiquitous broadband connectivity, multi-format video broadcasting, secure satellite communications and seamless mobility services. OneWeb’s mission is to enable affordable Internet access for everyone, to connect all the unconnected schools of the world, and to fully bridge the digital divide by 2027. OneWeb is building a communications network, with a constellation of Low Earth Orbit satellites, that will provide connectivity to billions of people around the world. With more than 10 terabits per second of new capacity, it will extend the networks of mobile operators and ISP’s to serve new coverage areas, bringing voice and data access to consumers, businesses, schools, healthcare institutions and other end users. Softbank  is a global technology player that aspires to drive the information revolution. The SoftBank Group holding company owns a global portfolio of companies, including advanced telecommunications, internet services, AI, smart robotics, IoT and clean energy technology providers. In September 2016, ARM Holdings plc, the world’s leading semiconductor IP company, joined the SoftBank Group.]]>

French Aircraft Engine Maker Safran to Acquire Zodiac Aerospace Cabin Maker for $9B

French Aircraft Engine Maker Safran to Acquire Zodiac Aerospace Cabin Maker for $9B

as reported by ExitHub in October 2016. Zodiac is a world leader in aerospace equipment and systems for commercial, regional and business aircraft and for helicopters and spacecrafts. It develops and manufactures state-of-the-art solutions to improve comfort and facilities on board aircrafts and high-technology systems to increase aircraft performance and flight safety. The company has 35,000 employees worldwide and generated revenue of €5.2 billion in 2015/2016. Safran is a leading international high-technology group with three core businesses, Aerospace (propulsion and equipment), Defense and Security. Operating worldwide, the group has 70,000 employees and generated sales of €17.4 billion in 2015, holding world or European leadership positions in its core markets. The group invests heavily in research & development, including expenditures of more than €2 billion in 2015. The deal is expected to create a global leader in aircraft equipment. On a pro forma basis, including Safran’s world leading propulsion business, the combined group would have around 92,000 employees (of which more than 45,000 in France), €21.2 billion in adjusted revenues and €2.7 billion in adjusted recurring operating income. On this basis the combined group would form the third largest player worldwide in the aerospace sector. The combined group would become the second largest player worldwide in aircraft equipment with pro forma revenues in these businesses of €10 billion, and it would have a footprint in over 60 countries. “This planned acquisition is fully consistent with the strategy we clearly outlined almost a year ago at our Capital Markets Day, to bolster Safran’s core aerospace activities with quality businesses which share our DNA: technology, tier-1 positions and recurring revenue streams. It will strengthen our position and create significant value through integration and synergies,” said Safran chairman Ross McInnes, who would remain as chairman of the combined group. “The creation of this new global leader in the aerospace industry is led by a strong industrial rationale and a long term vision,” said Zodiac chairman Didier Domange. Safran has already identified €200 million in annual cost synergies, of which 50% should be achieved in year 1 and 90% in year 2, enabling the transaction to meet Safran’s RoCE goal in 3 years. Synergies should come from savings in procurement and SG&A and the optimization of the combined group’s footprint. Beyond identified cost synergies, Safran would enable Zodiac’s seats and interiors business to accelerate their recovery and progress towards or above their historical margin levels. The transaction would be expected to have a double-digit accretive effect on earnings per share as of the first full fiscal year of consolidation. Under the deal, Safran will launch a tender offer for Zodiac at €29.47 per share, representing a premium of 24.6 percent over its closing price on January 18, 2017, and 36.1 percent over its 3-month volume-weighted average price. The tender offer would be subject to an acceptance of 50% of Zodiac shares. Family shareholders and two institutional investors, FFP and Fonds Stratégique de Participations, which are Zodiac’s reference shareholders with a 32 percent stake, intend to remain long-term shareholders of the combined entity and would undertake not to tender their shares into the public offer. Zodiac’s reference shareholders and the French State intend to remain core shareholders of Safran with around 22 percent of its capital, with a two-year lock-up agreement. Safran will finance the cash portion of the transaction and its special dividend with a combination of cash on hand, including future proceeds from the disposals of Safran Identity & Security, existing committed undrawn facilities and a €4 billion fully underwritten bridge loan. Upon completion of the transaction, Safran would target an investment grade profile with a targeted adjusted net debt / adjusted EBITDA ratio around 2.5x. After the completion of the transaction, “Safran would maintain its practice of distributing an annual dividend amounting to approximately 40 percent of adjusted net income,” the company said in a statement. The deal is subject to the approval of Safran’s and Zodiac’s shareholders, antitrust clearances, regulatory approvals and other customary conditions. The completion of the tender offer is expected by the end of the 4th quarter 2017 and completion of the merger is expected early 2018. Bank of America Merrill Lynch and Lazard acted as financial advisors to Safran, BDGS served as legal counsel, and Bank of America Merrill Lynch acted as bridge underwriter. BNP Paribas and Rothschild acted as financial advisors to Zodiac Aerospace and Bredin Prat served as legal counsel.]]>