July 26, 2019 | Telecom | Europe | Ended

Inmarsat / Apax, Warburg Pincus, CPPIB, OTPP: UK National Security, Ligado and Antitrust Updates

Some dynamics of the Inmarsat takeover have changed since the deal was originally announced on 25-Mar-19, but the general likelihood of outcomes for securityholders remains. On 22-Jul-19, shortly after the Competition and Markets Authority (CMA) launched a merger enquiry on antitrust in the UK, the Secretary of State for Digital, Culture, Media & Sport (SoS) issued a public interest intervention notice (PIIN) on national security grounds. This move is not uncommon yet was unexpected given Apax is a former owner of Inmarsat and, just five days prior to the SoS intervention notice, Apax stated that the UK government had accepted voluntary undertakings following “constructive” discussions with all consortium members. Trading in Inmarsat has been relatively muted since 22-Jul-19, indicating that investors still believe the CMA and the SoS will waive the deal through. In this report, we assess what Apax has offered relative to other national security-scrutinised deals, the public interest process, timing, and the most likely SoS decision. We also revisit key investment considerations involving the Ligado argument, antitrust approvals, the convertible bond and our latest break price estimates.

Contents 1.“Wishy-Washy” Undertakings May Have Led to Intervention 2. UK National Security Review: Responsibilities, Process and Timing 3. Ligado Update: Mixed Signals from FCC Discussions with Ligado 4. Regulatory and Antitrust Update: Outstanding Jurisdictions 5. Inmarsat Convertible Bond Update: Fear and Strategies 6. Updated Break Prices and Risk Arbitrage Thoughts Appendices A. Undertakings Offered by the Apax-led Consortium B. Can an Early UK Election be Triggered Before Deal Close? (33 pages)

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