GE AMERICOM, SES ASTRA WON'T CONFIRM REPORTS OF POSSIBLE MERGER
GE Americom and SES Astra were closed-mouthed Tues. on industry reports they were negotiating $5 billion deal that would merge 2 companies. SES Astra Senior Representative-U.S. Dean Olmstead told us he couldn’t discuss details of talks, but “we're pursuing the same strategy,” and he still hoped deal could be in place by spring. He said industry reports that purchase of GE Americom was imminent were “surprising,” but they “didn’t come from our side. I can’t say one way or another if they're true.” GE Americom spokeswoman said she never would issue statement on rumor of pending “transaction,” but admitted “we're always looking for opportunity to expand our leadership position” in satellite industry.
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News of possible sale was somewhat surprising since it wasn’t widely known that GE Americom was up for sale, said satellite analyst William Kidd of C.E. Unterberg Towbin. GE Americom reportedly also was being pursued by EchoStar, Intelsat, Loral. With possible deal with rival DirecTV, EchoStar is said to be highly interested in joining forces with, or acquiring, satellite operator. Spokesmen for EchoStar and Intelsat refused comment. Loral spokesman wouldn’t comment, but said company would “evaluate any opportunities that come up.” Intelsat spokesman didn’t return phone calls. Reportedly pending deal is among flurry of activity in continuing consolidation of satellite industry (CD Feb 14 p2), analysts said.
Industry sources said SES Astra, which also was eyeing PanAmSat, would give GE Americom stock and cash for its satellite subsidiary. GE Americom would keep representative on board while Astra would control daily operations. One proposal reportedly being discussed calls for GE Americom to merge its satellite services unit with SES Astra technical services, broadcast unit, international satellite network. Some satellite analysts believe deal could be completed by end of month or mid-April. Joint venture or partnership wasn’t out of question either, sources said. If no deal is struck, GE Americom could be purchased by one of other suitors.
Olmstead said last month company was determined to get in U.S. market by spring to “fill the North American vacuum in our global strategy.” He said finding strategic partner was essential part of effort. “We're not going to come to the U.S. and elbow our way in without joining with an established player.” Company talks with PanAmSat have “cooled off” and discussions with Loral on joint venture haven’t progressed beyond “preliminary stage,” leaving GE Americom as prime candidate for SES Astra to strike deal, industry official said. Loral remains “wild card” in negotiations because CEO Bernard Schwartz admitted last year he had discussions with SES and other companies on possible mergers or partnerships. Since then, Loral officials generally haven’t speculated publicly about plans.
GE Americom is attractive because it has 15 satellites, including 12 that are linked to U.S. Company owns largest satellite fleet in N. America and provides access for cable systems, data transmissions, radio and Internet traffic where it believes it has most potential for growth. Company also has started strong marketing effort in S. America, where it launched satellite and committed to purchasing 6 more birds by 2004 and building on acquisition of Columbia Communications to gain larger share of markets in Asia and Europe.
Possible merger of GE Americom and SES Astra may be good fit, analysts said, because of their natural synergies. SES has $1 billion of investment under way to expand in Europe, Latin America, Asia. Company bought 34% stake in AsiaSat for $331 million and plans to launch 4th satellite in region. SES also has 19% stake in Brasilsat. Bread-and-butter business is direct-to- home broadcasting to 29 million subscribers in Europe. It also transmits cable TV programming to companies in region. SES has expressed desire to provide advanced broadband services across world. Company owns 13 satellites and has “strong record of financial success,” analyst said.