British satellite company OneWeb and French satellite operator Eutelsat have signed a memorandum of understanding to merge the rival businesses.
The all-share merger will see OneWeb’s 648 low earth orbit (LEO) satellites combine with Eutelsat’s 36 geostationary orbit (GEO) satellites.
The UK government will keep its shareholding within OneWeb after rescuing it from bankruptcy in 2020 with Bharti Global, with Eutelsat owning the remaining shares.
The merger comes after Eutelsat’s equity investment last year into OneWeb, which gave it 23% of its share capital.
“Bringing together our two businesses will deliver a global first, combining LEO constellations and GEO assets to seize the significant growth opportunity in connectivity, and deliver to our customer’s solutions to their needs across an even wider range of applications,” said Dominique D’Hinnin, chairman, Eutelsat.
OneWeb is building an internet satellite constellation to supply broadband connection across the world and aims to have its first generation system live by the end of the year.
The announcement confirms days of speculation and Eutelsat’s confirmation yesterday that it was in talks with OneWeb.
OneWeb valued at £2.8bn
OneWeb has been valued at $3.4bn (£2.8bn) in the transaction. Eutelsat will remain on the Euronext Paris but will apply for a standard listing on the London Stock Exchange.
Sunil Bharti Mittal, executive chairman, OneWeb said: “The positive early results of our service together with our strong pipeline represent a very exciting opportunity in the fast-growing satellite connectivity segment, especially for customers requiring a high speed, low latency experience.”
Previous investments into the company include Japanese multinational conglomerate Softbank, Bharti Global and the UK government. The Department for Business, Energy & Industrial Strategy said in a statement:
“The merger is positive news for UK taxpayers: having made a $500m investment in OneWeb 2 years ago, the UK government will now have a significant stake in what will become a single, powerful, global space company.”
However, the deal is still at an early stage and is likely to face regulatory scrutiny.
Today the Competition and Markets Authority (CMA) launched an inquiry into fellow UK satellite operator Inmarsat being acquired by US competitor Viasat in a £5.4bn deal.
Image credit: Eutelsat via Flickr