French satellite operator Eutelsat has agreed an $831 million takeover of Mexico’s Satmex as it works on expanding its presence in so-called “high growth markets”.
Announced on Wednesday, the deal will see Eutelsat (Paris, France) pay $831 million in cash and assume the Satmex’s (Mexico City, Mexico) net debt of $311 million in exchange for 100% of the company.
Eutelsat expects the transaction to benefit top-line growth but initially be “slightly dilutive” to its margin for earnings before interest, taxation, depreciation and amortization (EBITDA), because of Satmex’s more diversified portfolio of businesses.
Longer term, however, Eutelsat says the integration of Satmex into its operations will lead to higher margins.
Satmex has an 11% share of the Latin American market, where it is particularly strong in the areas of corporate data networks and cellular backhaul, claims Eutelsat.
It also owns Alterna TV, a provider of Hispanic television programming to the US market.
Last year, Satmex reported revenues of $111.8 million and EBITDA of $89.1 million.
“The acquisition of Satmex … will make Eutelsat a key operator in vibrant digital markets across Latin America,” said Michel de Rosen, the chief executive of Eutelsat. “With Satmex’s strategic orbital slots, state-of-the-art fleet and upcoming satellites, Eutelsat is gaining a robust platform from which to access the significant opportunities in this region.”
According to market-research company Euroconsult, Latin America is one of the fastest-growing satellite markets in the world and is expected to generate annual growth in demand of more than 7% between 2011 and 2016.
“This is a very positive outcome for the shareholders and other stakeholders of Satmex, and I am delighted at the prospect of Satmex joining the Eutelsat Group,” said Patricio Northland, chief executive of Satmex. “Our fleet will provide Eutelsat with a unique strategic opportunity to enter the fast-growing Latin American market and obtain premier orbital locations across the continent.”
The companies expect the deal to close by the end of 2013, subject to government and regulatory approvals.