Inmarsat Buyout Path Clears After Investors Drop Opposition

(Bloomberg) --

A group of Inmarsat Plc shareholders dropped their opposition to a $3.4 billion takeover of the satellite operator, paving the way for a private equity buyout.

Hedge funds Oaktree Capital Management, Kite Lake Capital Management and Rubric Capital Management LP had complained they were at risk of being short-changed, arguing that the takeover price failed to reflect the full value of Inmarsat's spectrum assets.

Hours before a London court was due to hear the case on Tuesday, Inmarsat said in a statement that the shareholders “no longer intend to raise objections” at the hearing.

The buyout consortium, which includes Apax Partners and Warburg Pincus, said Monday it wouldn't increase its cash offer from March, representing a “substantial premium” to the share price before the bid.

The three contesting shareholders confirmed in a separate statement that they decided to drop their opposition after the buyers refused to raise the price. They said they hadn't intended to prevent the buyout from being allowed by the court, but wanted to create an opportunity for Inmarsat and the bidders to revise the offer.

Another shareholder that had objected to the deal terms, Albert Bridge Capital LLP, declined to comment.

Inmarsat shares rose 0.6% to 543.6 pence by 10:14 a.m. in London. The stock is down 10% from a closing high of 608.2 pence in early September as speculation of a counterbid faded.

The shareholder complaints focused on deferred payments to lease airwaves from Inmarsat by U.S. firm Ligado Networks LLC, which they said could add significantly to the company's value.

Inmarsat said last month that the takeover price reflected “any potential for residual upside” from Ligado.

Bloomberg Intelligence analyst John Davies said it's a “sensible move” for the hedge funds to drop their complaints because the bidders refused to pay more, and the U.S. Department of Defense had signaled its opposition to Ligado's proposed use of airwaves.

--With assistance from Nishant Kumar.

To contact the reporter on this story: Thomas Seal in London at tseal@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Thomas Pfeiffer

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