Satellite operator Iridium to be sold to private equity firm for $591 million

24 September 2008

The company that sought to revolutionise global communications with its catchphrase ''Geography is history'' now finds itself the target of a takeover bid which may bring it out of its tangled history that had seen its value plummet from the $6 billion during inception to a mere fraction of it today. Ex-Motorola venture Iridium Holdings LLC is being acquired by an affiliate of private equity firm Greenhill & Co. for $591 million.

GHL Acquisition Corp., an eight-month-old special purpose acquisition company that has raised $400 million of gross proceeds, was founded by New York-based investment bank Greenhill & Co. Inc. The deal includes $100 million in cash - $77 million from GHL and the rest from Greenhill. In addition, Iridium shareholders will get $360 million in GHL shares. The total value of the deal also includes $131 million of debt Iridium held as of 30 June.

Greenhill will invest $22.9 million in Iridium prior to the purchase by affiliate GHL Acquisition Corp. and use $324 million to pay off debt and other costs, New York-based Greenhill said. Iridium shareholders will receive about $77 million in cash and 36 million shares in the company to be called Iridium Communications Inc.

Iridium said the proceeds of the transaction would enable Iridium to be debt free and well positioned to develop its next generation satellite constellation, "Iridium NEXT" to replace the existing network of 66 satellites. Only a few months back, a similar transaction involving London-listed satellite network operator Inmarsat had failed to materialise (See: Inmarsat stock declines in London after Harbinger breaks off takeover talks)

Scott L Bok, CEO of GHL Acquisition, said, "After carefully considering numerous potential acquisition candidates, we are pleased to have identified such an attractive partner in Iridium and its management team. Iridium is the fastest-growing full-service voice and data MSS provider and one of only a handful of major players in its industry, which has significant barriers to entry.''

Reflecting on the niche category Iridium operates in, he added, ''It has developed substantial scale in terms of revenue and cash flow, and has an impressive track record of growth across each of its five subscriber verticals. At the agreed transaction valuation, Iridium should be a compelling alternative to investors in a fast growing sector with few participants."