Gapping down
In reaction to disappointing earnings/guidance:
- PSMT -8.5%
Other news:
- NOG -1.9% (CEO and President swap titles)
- CBOE -1% (reports Q2 trading metrics)
- FB -0.5% (slighly pulling back after closing near highs - up 3% yesterday)
Analyst comments:
- ABUS -4.9% (downgraded to Neutral at B. Riley FBR)
- GCI -3.1% (downgraded to Underweight from Neutral at JP Morgan)
- HCLP -2.5% (downgraded to Neutral from Buy at Guggenheim)
- COST -1.4% (downgraded to Neutral from Buy at Northcoast)
Gapping up
In reaction to strong earnings/guidance:
- N/A.
Other news:
- BIIB +13.1% (Biogen and Eisai (ESALY) report positive topline results of the final analysis for BAN2401)
- VC +5.9% (will replace WGL Holdings Inc. (WGL) in the S&P MidCap 400)
- DB +3.9% (JP Morgan (JPM) and Industrial and Commercial Bank of China are interested in acquiring stake in DB, according to Wiwo)
- CVEO +2.7% (awarded contracts to supply accommodations for four locations along the Coastal GasLink pipeline project in British Colombia, Canada)
- ERA +2.4% (Era Group entered into litigation settlement agreement with Airbus (EADSY) Helicopters; Airbus agreed to pay $42.0 mln and provide Era with certain trade account credits)
Analyst comments:
- VEON +0.7% (upgraded to Buy from Neutral at Goldman)
Inmarsat rejects EchoStar's increased offer
06 JUL 2018
Further to the announcement by Inmarsat plc [LSE:ISAT.L] ("Inmarsat") on 8 June 2018, EchoStar Corporation[NASDAQ:SATS] ("EchoStar") confirms that it made a proposal to acquire the entire issued and to be issued share capital of Inmarsat (the "Proposal").
The board of Inmarsat rejected the Proposal and subsequently, on 3 July 2018, EchoStar presented a new and improved proposal (the "Improved Proposal") which was rejected by Inmarsat on 4 July 2018. EchoStar continues, however, to seek engagement with the board of Inmarsat on a constructive basis, with a view to agreeing the terms of a recommended transaction.
Under the terms of the Improved Proposal, Inmarsat shareholders would be entitled to receive 265 pence in cash and 0.0777 new shares of EchoStar class A common stock (to be listed on NASDAQ) for each Inmarsat share, (subject to the reservations referred to below). Based on the closing price per share of EchoStar class A common stock on 5 July 2018 of USD 45.45 and an exchange rate of GBP:USD of 1:1.3244 on 5 July 2018, the Improved Proposal implies an equivalent value of 532 pence per Inmarsat share, valuing Inmarsat's existing issued share capital at approximately GBP 2.45bn.
As a result of the Improved Proposal, holders of the Inmarsat 3.875% convertible bonds due 2023 (the "Convertible Bonds") would be entitled to receive, in respect of each Convertible Bond, a value equivalent to approximately USD 296,225 (in a combination of cash and / or shares) on the basis of the exchange rate and closing share price assumptions set out above.
Accordingly, the Improved Proposal would represent in aggregate, a value of approximately GBP 3.2bn for the issued and to be issued share capital of Inmarsat and the Convertible Bonds.
Deutsche Bank AG is acting as financial adviser to EchoStar.
The Improved Proposal represents:
(i) a premium of 46% to the closing price of 363 pence per Inmarsat share, and a premium of 42% to the closing price of USD 209,300 per Convertible Bond, in each case on 30 May 2018 (being the last day prior to the date of EchoStar's initial approach);
(ii) a premium of 40% to the volume weighted average closing price of 380 pence per Inmarsat share for the 3 months ended 7 June 2018 (being the last day prior to the announcement by Inmarsat that it had received a proposal from EchoStar); and
(iii) a premium of 27% to the closing price of 418 pence per Inmarsat share, and a premium of 39% to the closing price of USD 212,500 per Convertible Bond, in each case on 7 June 2018 (being the last day prior to the announcement by Inmarsat that it had received a proposal from EchoStar).
EchoStar believes a combination of EchoStar and Inmarsat is strategically compelling. The combined group would be one of the world's leading satellite providers and be well supported by a global portfolio of complementary assets and service offerings. EchoStar believes that the Improved Proposal presents a compelling opportunity for Inmarsat's shareholders to realize certain value from their investment in Inmarsat while also participating meaningfully in the upside potential of the combined company.
The Improved Proposal would also extend to any Inmarsat shares unconditionally allotted on conversion of the Convertible Bonds before the date on which any EchoStar offer for Inmarsat shares closes. To the extent that Convertible Bonds are not so converted, if EchoStar proceeds with the Improved Proposal, it will make appropriate proposals, in due course to the holders of Convertible Bonds in accordance with the Code. In aggregate, such an offer for Convertible Bonds would result in a maximum equivalent value of USD 962.7 million being payable to holders (assuming up to 44.4 million new Inmarsat shares would be issuable on full conversion of the bonds, subject to the same exchange rate and closing price assumptions referred to above).
It is EchoStar's current preference to implement the transaction by way of a scheme of arrangement.
EchoStar would be prepared to proceed to implement the Improved Proposal subject to obtaining a satisfactory extension to the "put up or shut up" deadline of 5pm (UK time) on 6 July 2018, and the following matters:
(i) Completing to its satisfaction a customary due diligence investigation;
(ii) The finalization of mutually acceptable definitive documentation customary for a transaction of this type, including the terms and conditions typical for a recommended UK public offer and final board approvals; and
(iii) The recommendation of the Inmarsat board.
EchoStar reserves the right to waive any or all of the matters referred to in paragraphs (i)-(iii) above.
EchoStar reserves the right to vary the form and/or mix of the consideration described in this Improved Proposal and to make an offer on less favorable terms:
(i) with the recommendation of the board of Inmarsat;
(ii) if Inmarsat announces, declares or pays any dividend or any other distribution to shareholders, in which case EchoStar will have the right to make an equivalent reduction to the proposed price;
(iii) if further shares in Inmarsat (or rights to subscribe for such shares) are issued from the date of this Improved Proposal (except for shares to be issued upon any conversion of Convertible Bonds and currently outstanding in-the-money share options);
(iv) if a third party announces a firm intention to make an offer for Inmarsat on less favorable terms than the possible offer; and/or
(v) following the announcement by Inmarsat of a whitewash transaction pursuant to the Code or a reverse takeover (as defined in the Code).