By Kim Robert McLaughlin (Bloomberg) — Inmarsat Plc rose as much as 12 percent after the British satellite company last week said it had rebuffed a takeover proposal from EchoStar Corp.
A “highly preliminary” offer was turned down by the board after discussions with its advisers, Inmarsat said in a statement on Friday. “It very significantly undervalued Inmarsat and its stand-alone prospects. The board remains highly confident in the independent strategy and prospects of Inmarsat.”
The stock rose 11 percent to 525 in early trading in London on Monday. The statement from Inmarsat on Friday followed a 13 percent surge in its shares, the most in a decade.
EchoStar, founded by billionaire Charlie Ergen, has long been seen as a potential bidder for Inmarsat, along with SoftBank Group Corp.’s OneWeb. A stock slump at the London-based company has put it at the top of analysts’ lists of potential targets for consolidation in the satellite industry, which is becoming increasingly crowded with a rising number of rigs going up to support new services such as in-flight Wi-Fi and transmission of digital photos.
Inmarst management must hold out for a higher offer, Jefferies analyst led by Giles Thorne said in a note to clients.
Inmarsat sees aviation services as its biggest growth driver in the coming years and is also seeking to diversify into businesses like connected cars, after coping with a protracted slowdown in the shipping industry. The company is also facing new competition in the shipping business, its biggest revenue generator, after U.S.-based Iridium Communications Inc. last month won regulatory approval to start offering services from 2020.
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