This article is more than 2 years old

This article is more than 2 years old

US satellite company EchoStar has walked away from attempts to acquire Inmarsat after a second takeover bid was rejected by its UK rival.

EchoStar said it had no intention of making a formal takeover bid on Friday afternoon, after issuing a statement earlier in the day saying that its latest cash and shares offer had been rejected. Shares in Inmarsat closed down 8% at 484p.

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The second announcement came less than half an hour before a 5pm London deadline set by the UK Takeover Panel for EchoStar to either make a firm offer for Inmarsat or walk away.

After EchoStar’s withdrawal, Inmarsat’s board said it remained “highly confident” in its strategy and prospects.

EchoStar had been building a small stake in Inmarsat and had its first offer, which was tabled last month, dismissed out of hand. Inmarsat said it “significantly undervalued” the company.

EchoStar’s latest offer values the company at 532p a share, well below the level analysts believe will need to be tabled to win over Inmarsat’s board and get a deal recommended to shareholders. Inmarsat shares were trading at 470p on Friday after news of the rejection of the offer.

Analysts at RBC Europe believe it will take a bid of “at least” 750p to gain board or shareholder approval.

“Given the political backdrop (sensitive satellite infrastructure) we believe Echostar is likely to need a recommended offer as a hostile bid could allow the company to seek political protection,” the RBC analyst Wilton Fry said in a note to investors.

Inmarsat, which employs more than 1,500 people, has provided technology used by the British armed forces, although its largest single customer is the US military.

The London-based company, which has 13 communications satellites in orbit, provided satellite services to the Ministry of Defence to improve ground communications for soldiers fighting in Afghanistan.

Its “groundbreaking” technology was used in the hunt for the missing Malaysia Airlines flight MH370, which disappeared in 2014 and is believed to have crashed into the southern Indian Ocean.

The firm has repeatedly won praise from the government, thanks to its leadership position in the British space industry, excluding the Franco-German industrial group Airbus, which has sizeable operations in the UK but is French-owned.

The former chancellor George Osborne praised Inmarsat in 2012 as he announced £1.2bn of funding over five years to increase Britain’s role in European space projects.

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The UK’s place in the European Space Agency, which is working on the €10bn Galileo satellite navigation system, is uncertain amid the Brexit negotiations. Inmarsat is also a world leader in several cutting-edge technologies such as mobile satellite communications and maritime and aviation safety, while it is among the largest providers of inflight internet services for airlines.

Its four Global Xpress satellites provide the world’s only global high-speed broadband operation, with a fifth satellite due to launch next year to increase capacity. It is also working with Germany’s Deutsche Telekom on the European Aviation Network, which will provide high-speed broadband to air passengers across the continent.

EchoStar’s interest is likely to be fuelled in part by Inmarsat’s exposure to the US, given that the US military is the company’s largest single customer.