French and British satellite firms Eutelsat and OneWeb on Tuesday announced plans to combine forces and create a "global leader" in the burgeoning space-based internet industry.
There is a rocket at the European Space Center.
Eutelsat and OneWeb said in a statement that they would combine resources to create a leading global player in space.
OneWeb shareholders will exchange their shares for new ones from Eutelsat which will result in a 50% stake in the new combined entity.
According to the statement, the company will seek a listing on the London Stock Exchange.
Major shareholders of both companies have come out in support of the deal and will be represented on the entity's board.
Eutelsat and OneWeb said the new entity will be uniquely positioned to capture the fast-growing global connectivity market and could generate 1.5 billion in cost synergies.
The deal will accelerate the commercialization of OneWeb's fleet according to the chairman of the combined entity.
The high stakes are underscored by the deal as well as the willingness of European governments to accommodate security concerns. If the merger succeeds, it will create a European challenger to take on ventures led by Musk and Bezos. The billionaires in the US have been giving money to the industry for a long time. The pair have been at odds over their efforts to prevail in space, including using a constellation of satellites. Private companies entering into a domain normally occupied by states has caused headaches for regulators.
Eutelsat's shares plummeted after the company confirmed merger talks. According to analysts, the selloff signaled disappointment among investors that the company would be directing cash towards the deal and future investments rather than immediate returns for shareholders. Eutelsat will suspend its dividends for two years as a result of the merger.
Clearance and vetting from regulators. The deal is still subject to approval from regulators and is likely to be scrutinized heavily from an antitrust perspective. The deal will need political consensus from both the U.K. and EU at a time when the U.K. chooses a new Prime Minister. British, French and Chinese states are involved in the deal and it will require national security clearances. Major shareholders, including the U.K. government, have agreed to the deal and have partially dealt with the issues. The deal is expected to close in the first half of the next decade.
$17 billion. According to Eutelsat, the market for satellites will be worth billions of dollars by the year 2030.
A total of $14.1 billion. Forbes estimates that the net worth of the family is one of the richest in India. One of India's largest mobile phone operators is owned by the same man.
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