Global takeover of Intelsat, worth $3.1 billion, concluded by SES, forming a dominant multi-orbit space powerhouse
**SES-Intelsat Merger to Deliver €2.4 Billion in Synergies and Strengthen Global Satellite Operator**
The satellite industry is set for a significant shake-up with the completion of the merger between SES, a leading space solutions company, and Intelsat. The newly combined company will boast an expanded fleet of 120 satellites, offering multi-orbit, multi-band satellite and connectivity solutions to businesses and governments worldwide.
The merger is projected to generate synergies with a total net present value (NPV) of approximately €2.4 billion, translating to an annual run rate of about €370 million once fully realized. Approximately 70% of these synergies are expected to be executed within three years following the closing of the transaction.
The combined company is forecasted to generate approximately €3.7 to €3.8 billion in annual revenue in 2024, with a low- to mid-single-digit average annual growth rate through 2028. The 2024 pro forma Adjusted EBITDA is about €1.8 billion, expected to grow at a mid-single-digit rate annually post-merger, factoring in operational efficiencies and revenue growth.
Combined capital expenditures are estimated to be around €1 billion in 2024 but will decrease to an average of €600-€650 million annually during 2025-2028, including synergy benefits, thus improving free cash flow generation. The merged entity aims to produce over €1 billion in adjusted free cash flow by 2027-2028, supported by a strong contract backlog exceeding €8 billion.
The transaction is expected to yield an internal rate of return exceeding 10%, indicating a financially accretive deal for shareholders. Post-closing, the company's net debt to EBITDA ratio is forecasted to start at around 3.5 times, reducing below 3 times within 12-18 months, aligning with maintaining an investment-grade balance sheet. SES intends to sustain an annual base dividend (approximately €0.50 per A-share), with a stable to progressive dividend policy, demonstrating confidence in cash flow stability.
The merger creates a more robust financial foundation for SES, with pro forma combined revenue of €3.7 billion projected to grow at a low- to mid-single digit CAGR (2024-2028E). The savings will primarily come from streamlined operations, optimised capacity costs, and procurement efficiencies, along with the strategic integration of satellite fleets and ground infrastructure.
Adel Al-Saleh, CEO of SES, stated that the merger will allow the company to deliver next-generation connectivity and space-enabled services in smarter and quicker ways. The new SES Senior Leadership Team can be found on the company's website.
SES remains headquartered in Luxembourg and is publicly listed on the Paris and Luxembourg stock exchanges (Ticker: SESG). The company maintains a significant presence in the United States with its North American main office in McLean, Virginia.
PJT Partners served as the financial advisor to Intelsat during the acquisition and rendered a fairness opinion to the Intelsat S.A. Board of Directors. Gibson, Dunn & Crutcher, Hogan Lovells, Arendt & Medernach, and Freshfields served as legal counsel to SES during the acquisition, while Skadden, Arps, Slate, Meagher & Flom, Wiley Rein, and Elvinger Hoss Prussen served as legal counsel to Intelsat. Morgan Stanley & Co. LLC acted as co-financial advisor, and Deutsche Bank Securities Inc also acted as a financial advisor. Morgan Stanley and Deutsche Bank AG, Filiale Luxembourg provided committed financing for the transaction.
The assets and networks, once fully integrated, will put SES in a strong competitive position to better serve the evolving needs of its customers, including governments, aviation, maritime, and media across the globe. The merger is set to redefine the satellite industry, offering innovative solutions and enhanced capabilities to meet the ever-growing demand for connectivity.
- The synergies generated from the SES-Intelsat merger will not only strengthen the new global satellite operator financially, but also allow them to invest in the latest technology and science for space-and-astronomy.
- With the combined company's expanded fleet of 120 satellites, they will be able to provide advanced satellite and connectivity solutions in various sectors such as government and business, making use of the latest advancements in infrastructure and satellite technology.
- The merger will lead to the integration of satellite fleets and ground infrastructure, which will improve operational efficiencies, reduce costs, and in turn, strengthen the company's position in the competitive space-and-astronomy field, thereby catering to the growing demand for connectivity in the era of technology.
