Intelsat-PanAmSat a Done Deal

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Intelsat Monday completed its $3.2 billion acquisition of PanAmSat Holding, with the merger creating the biggest global satellite company in the industry.

In a venture that results in a merged fleet of 51 birds, Intelsat acquired all of the outstanding common shares of PanAmSat for about $3.2 billion. The total value of the transaction, including PanAmSat debt that was refinanced or remained outstanding, is about $6.4 billion.

In order to eliminate overlap in functions like back-office services as a result of the merger, Intelsat expects to lay off about 400 employees over the next 18 months, according to a company spokeswoman. That would trim the employee roster of the combined companies to roughly 1,000 from 1,400.

With the addition of PanAmSat’s video-market expertise, advanced satellite fleet and media-customer base to Intelsat’s portfolio, the new Intelsat is now the largest provider of fixed-satellite services worldwide to the media, network services/telecommunications and government-customer sectors.

For the 12-month period ended March 31, pro forma revenue for the combined company totals more than $2 billion and adjusted EBITDA (earnings before interest, taxes, debt and amortization) for Intelsat on a pro forma combined basis was $1.6 billion.

In addition to its large fleet of satellites, the combined Intelsat has a terrestrial infrastructure that includes eight owned teleports, fiber connectivity and more than 50 points of presence in almost 40 cities

PanAmSat’s expertise and customer base has been on the video side, with a client roster of major cable programmers. In contrast, Intelsat’s forte has been in telephony, data and broadband, with many international and government customers.

When the deal was announced last August, “We talked about how complementary the two businesses are, and now that I can go through the customer lists, I see that there’s very little overlap,” Intelsat CEO David McGlade said in an interview.

PanAmSat’s customers include Comcast Media Center, Discovery Communications, News Corp., Home Box Office and Disney. Intelsat’s clients include CBS, Globecast, the British Broadcasting Corp. and Cox Sports.

As a result of the acquisition, Intelsat now: carries one out of every four television channels transmitted over fixed satellites; supports 27 direct-to-home platforms worldwide; operates 16 satellites that are part of video neighborhoods around the world; is the No. 1 provider of transponders for video programming worldwide; carries more HDTV programming than any other fixed-satellite carrier; is the largest provider of commercial satellite services to the government sector; is the leading provider of services to enterprise, Internet and mobile network operators; and provides communications services to 99% of the world’s populated regions.

“We have chosen the corporate theme, ‘Closer, by Far,’ to articulate our vision for the new Intelsat and its relationship with its customers,” McGlade said in a prepared statement. “It is our mission to bring customers closer to achieving their business potential and closer to the people and businesses they serve.”

Intelsat’s and PanAmSat’s integration process is already underway so that the transition will be smooth for customers, according to company officials. Intelsat has adopted a “one-company” operating philosophy by fully integrating PanAmSat’s assets and operations.

McGlade will continue to serve as Intelsat CEO. The executive team also includes James Frownfelter, formerly PanAmSat’s president, as chief operating officer; Phillip Spector, executive vice president and general counsel; and Jeffrey Freimark, executive VP and chief financial officer. Joseph Wright, PanAmSat’s CEO, has been appointed chairman.

Intelsat will continue to be domiciled in Pembroke, Bermuda, and maintain its U.S. headquarters in Washington, D.C.

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