(Bloomberg) —
British satellite firm OneWeb is nearing a deal to combine with France’s Eutelsat Communications SA in a transaction that would create a pan-European operator that could better compete with Elon Musk’s Starlink project, according to people familiar with the matter.
OneWeb and Eutelsat could reach an agreement as soon as next week, the people said, asking not to be identified because the discussions are private. OneWeb, in which the UK government has a minority stake, would be valued at about $3 billion or more, the people said.
Paris-listed Eutelsat, with a market value of about 2.4 billion euros ($2.5 billion), is backed by French state investment firm BPIFrance SA and is also a minority investor in OneWeb.
As part of the proposed transaction, existing investors in OneWeb would continue to hold minority stakes, the people said. Those investors include the UK government and Bharti Airtel Ltd., run by telecommunications tycoon Sunil Mittal.
The combined company would be listed in the Euronext bourse in Paris, though the firm could also seek a London listing in future, the people said.
While discussions are advanced, a final agreement hasn’t been reached and talks could still end without one, the people said.
A spokesman for OneWeb and a representative for the UK government declined to comment. A spokesperson for Eutelsat wasn’t immediately available for comment outside business hours in France.
Musk’s Starlink fleet of more than 1,500 satellites launched in the past three years by SpaceX has created an unprecedented challenge for rivals, leading to a wave of consolidation in the sector.
Last year, Viasat Inc. agreed to purchase Inmarsat Group Holdings Ltd. for $4 billion, creating the world’s biggest geostationary satellite company. Eutelsat itself rejected a takeover bid from billionaire Patrick Drahi that valued it at 2.8 billion euros.
OneWeb emerged from bankruptcy in 2020 in bailout by the UK with the help of Mittal, signaling a more interventionist industrial strategy by the government after Brexit. A deal with Eutelsat would be a rare example of a UK and a French company merging, and one that involves two state-backed companies shows how much the two governments are getting involved in the telecommunications industry.
The company was established in 2012 to build a constellation of small satellites in low-earth orbit, beaming internet connections to isolated places. OneWeb raised $3.4 billion from SoftBank Group Corp., Airbus SE and other big names before collapsing when lead investors pulled their money at the height of the coronavirus pandemic.
(Adds no comment from OneWeb, UK government in seventh paragraph)
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