European satellite operator Eutelstat will combine with U.K. rival OneWeb in an all-stock merger valued at $3.4 billion, according to a press statement issued in July.
Eutelstat will issue 230 million new shares and exchange them for the remaining OneWeb shares. Shareholders of both firms will own 50% of the new entity, which the companies forecast will generate $1.22 billion in revenues in the 2022-23 fiscal year.
“This combination will accelerate the commercialization of OneWeb’s fleet while enhancing the attractiveness of Eutelsat’s growth profile,” the firm’s Chairman, Dominique D’Hinnin, said in a statement. D’Hinnin will continue in his role after the merger.
Considered a competitor of SpaceX’s Starlink satellite internet project and Amazon’s Project Kuiper, OneWeb has its sights on distributing 648 low-earth orbit satellites aimed at providing broadband to locations with low internet access. The 428 satellites it now has in orbit will merge with Eutelstat’s 36 geostationary orbit satellites.
But OneWeb has encountered obstacles. In 2020, the U.K. government provided $500 million to help the startup come out of bankruptcy after it spent billions in venture capital. Also, following Russia’s invasion of Ukraine and its freeze on rocket launches, the company had to seek assistance from SpaceX.
Eutelstat said it would temporarily suspend its dividend to concentrate on OneWeb’s satellite constellation. The transaction is subject to the U.K.’s rigorous national security clearance process and assorted regulatory approvals. It excludes a “special share” that gives the U.K. government authority on national security concerns, including the security standards of OneWeb’s network.
OneWeb will continue to trade under its existing name and keep its headquarters in the U.K. Eutelsat, which is listed in Paris, plans to pursue an additional listing on the London Stock Exchange. The transaction is expected to close in the first half of 2023.