LONDON (Reuters) - The Competition and Markets Authority (CMA) said on Tuesday it was looking into whether the proposed acquisition of Britain’s largest satellite company Inmarsat (ISA.L) by a private equity-led consortium would affect the competitive landscape.
The watchdog invited interested parties to comment by July 29.
The review comes amid a tough regulatory environment for mergers and acquisitions (M&A), with the CMA previously blocking Sainsbury’s (SBRY.L) 7.3 billion pound takeover of Walmart-owned Asda (WMT.N) in April.
Private equity-led deals are typically seen as less damaging to competitors as buyout funds tend to cash out in three to five years after executing their turnaround plans.
But a takeover of Inmarsat was expected to be closely scrutinized by the British government and regulators as the satellite company is seen as a strategic asset.
Founded in 1979, Inmarsat was set up by the International Maritime Organization as a way for ships to communicate with shore and make emergency calls.
The FTSE 250 company, which has a market value of 2.6 billion pounds, sees a growing opportunity to supply in-flight broadband services to commercial aircraft, having partnered with U.S.-headquartered Panasonic Avionics, a unit of Japan’s Panasonic Corp, in September last year.
Inmarsat became a target for private equity investors after turning down an approach from U.S. satellite group EchoStar Corp (SATS.O) last year.
In March it agreed to be bought by a group of heavyweight buyout funds including British-based Apax Partners, U.S.-based Warburg Pincus and the Canada Pension Plan Investment Board (CPPIB) for $3.4 billion.
The $7.21 per share offer, which was also supported by the Ontario Teachers’ Pension Plan Board, came at a premium of about 24 percent.
The private equity bidders are looking to take the company private and will try to revive growth to make a profit.
Inmarsat reported a 13 per cent fall in first-quarter earnings at the end of March, hit by weak demand from the shipping sector and a lower contribution from partner Ligado.
Higher costs also ate into the company’s profit. Total net operating costs rose to $194.5 million from $170.5 million a year earlier.
Reporting by Pamela Barbaglia, editing by Louise Heavens and Kirsten Donovan