Eutelsat suspends dividends for two years as part of its merger with OneWeb

Madrid, 26 (European press)

French satellite operator Eutelsat Communications has temporarily stopped paying dividends to boost investment as part of its merger with OneWeb, so it will not make distributions among its shareholders in the next two years, the multinational said.

“Eutelsat will temporarily suspend the dividend,” the company confirmed, which will pay the corresponding dividend for the 2021/22 fiscal year with the option of “Scrib” and “after that, the dividends will be suspended for 2022-23 and 2023-24.”

Under the terms of the merger agreement, about which talks began a year ago, the transaction will be structured as an exchange of OneWeb shares for newly issued Eutelsat shares, with Eutelsat owning 100% of OneWeb at closing. Except for the UK Government’s “special procedure”.

In this way, existing shareholders of OneWeb will receive 230 million shares of the newly issued Eutelsat stock, which represents 50% of the increased capital of the new combined company, which has an estimated annual revenue of about 1,200 million euros with an expected average double-digit growth annually over the next decade.

The deal values ​​OneWeb at $3.4 billion (€3.327 million), meaning each Eutelsat share is worth about €12.

The companies also expect the merger to generate annual revenue synergies of around €150 million after four years, as well as cost synergy of more than €80 million before tax after five years, primarily by avoiding duplication of costs.

On the other hand, the capital expenditure optimization is expected to result in an estimated average savings of around €80 million per year, from the first year by leveraging the GEO/LEO hybrid satellite infrastructure and by improving the purchasing power of the combined pool. entity.

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The board of directors of the new combined company will consist of 15 members, including ten independent directors. Eutelsat and its major shareholders will propose seven board members, as well as the CEO of Eutelsat, while OneWeb and its major shareholders will propose seven members.

In this sense, Dominic Dhnin will be proposed as president of the new company and Sunil Bharti Mittal as co-chair, while Eva Pernik will continue as CEO.

The transaction is subject to the mandate of the relevant regulators and is also conditional on the approval of Eutelsat shareholders at the extraordinary general meeting, which will be held at the end of the first half of 2023, so the process is expected to conclude at the latest. end of the first half of 2023.

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