Intelsat and PanAmSat Merge for $3.2 B

Elena
03 Jul, 2006
New York City

The combined company

[R]8:00AM Intelsat Ltd. and PanAmSat Corp. are set to complete a $3.2 B merger deal.[/R]
After three years of intense deal making by outstanding private-equity companies on both sides of the Atlantic, Intelsat Ltd. and PanAmSat Corp. are ready to merge. The companies are scheduled to complete a $3.2 billion merger deal Monday, creating a closely held company. The combined company’s fleet will consist of more than 50 orbiting spacecraft, making it the largest and most diversified global satellite-services operator. The new company is planning to expand its business in India and Latin America. At the same time, it hopes to participate in the drive to turn cellular phones and other mobile devices into Internet connections and entertainment centers.

With offerings including direct-to-home television broadcasting and support for classified U.S.-government operations, the enlarged Intelsat promised to shrug off the industry''s staid image by exploiting burgeoning technologies. Investors who purchased some $3 billion in high-yield bonds from the two firms will demand significant synergies, little geographic overlap and streamlined management bent on reviving up growth in unconventional ways, if necessary. However, the combined company is likely to face major integration, personnel and marketing challenges to break out of the slow-growth pattern. The biggest immediate financial help is likely to come from a nearly 40% cut in the combined company''s work force. Total head count eventually will shrink to about 1,000 from 1,400 or so, with PanAmSat executives largely overseeing marketing efforts and Intelsat officials primarily in charge of technical and operating issues.

For Q1 PanAmSat posted revenue of $213.2 million, up 2.1%, while Intelsat reported a 4% drop in overall revenue to $280.4 million.


[R]7:15 AM Asia closes mostly higher.[/R]
Asian markets closed broadly higher. The Nikkei 225 finished the day at 15571.62, for a 0.43% gain. Retailers and banks led gainers. Clothing-chain operator Fast Retailing gained 2.3%. Seven & I Holdings, operator of 7-Eleven, gained 0.5%. Among the financials, Sumitomo Mitsui Financial Group advanced 1.7%, while Resona Holdings gained 4.4%. Exporters also registered gains, with Hitachi up 0.4%, and Nikon up 0.6%. Nissan Motor shares advanced 0.6%, buoyed by news the company is open to inviting General Motors into its alliance with Renault, a move that could create an automotive group eclipsing Toyota Motor. The benchmark Shanghai Composite Index advanced 1.5% to 1697.28, its highest close since it finished at 1715.14 on April 13, 2004. The Shenzhen Composite Index gained 1.6% to 440.13. Hong Kong shares ended higher, with Hang Seng Index advancing 59.04 points, or 0.4%, to 16326.66. On the Hong Kong stock exchange, offshore oil company Cnooc Ltd. gained 0.8%, while aluminum giant Chalco advanced 4.35%. Australia''s S&P/ASX 200 index climbed 0.36% and Taiwan''s Weighted index was up 0.14%. South Korea''s Kospi index was the only one to buck the trend edging down 0.04%.


[R][6:30 AM European shares advanced lifted by commodities and strong Asia.[/R]
European markets traded higher on Monday. The U.K. FTSE 100 index edged up 0.4% to trade at 5,854, the German DAX Xetra 30 index gained 0.2% at 5,694 and the French CAC-40 index increased 0.01% at 4,966. European movers included U.K. defense contractor BAE Systems which dropped 4.3% after it announced that an independent expert has valued its 20% stake in European plane manufacturer Airbus at 2.75 billion euros, below market expectations. EADS, which owns the rest of Airbus, edged down 0.5%. Oil companies were also in demand after British oil giant BP said that second-quarter production is expected to reach 4 million barrels of oil equivalent a day, or 3 million boepd excluding TNK-BP operations, primarily due to divestments. BP shares slipped 0.1% in London. British supermarket group WM Morrison advanced 1.7% in London after a report stated that the company is being targeted by a private-equity consortium consisting of Texas Pacific, CVC and Permina. Also, brewing company SABMiller increased 1.4% after it said that it has agreed to buy the Sparks and Steel Reserve brands and related and related trademarks from McKenzie River Corp. for $215 million.

Oil prices reached nearer $74 a barrel on Monday on concerns over the possibility of record demand for gasoline during the Independence Day holiday in the US. Nymex is closed for two days because of the Independence day holiday. Brent crude for August delivery rose 15 cents to $73.66 a barrel. Gold hit a high of $620.50 an ounce before easing to $619.35/620.35 by 0944 GMT. The U.S. dollar advanced against most other major currencies in European trading Monday. The euro traded at US$1.2760, down from US$1.2787 late Friday in New York. The dollar bought 114.76 Japanese yen, up from 114.38. The British pound traded at US$1.8432, down from US$1.8485.