LUXEMBOURG--(BUSINESS WIRE)--SES S.A.:
1) What is the rationale of the transaction? What is the benefit for SES shareholders?
This combination creates a stronger and more competitive multi-orbit operator with expanded network, increased revenue in highly valuable and growth segments, stronger financial profile, and greater ability to invest in the future to better compete in a dynamic, fast-moving, and competitive satellite communications landscape.
The combined company’s capabilities, alongside complementary partnerships, will provide customers with enhanced coverage, improved resilience, and greater flexibility, as well as enabling the company to develop and deliver compelling solutions to drive the specific applications that customers need.
The transaction is highly accretive to free cash flow per share from Year 1 and delivers €2.4 billion net present value of synergies (representing 85% of the equity value for Intelsat and an annualised run rate of around €370 million) of which 70% will be executed within 3 years after closing of the transaction (expected during second half of 2025).
The combined company will have €9 billion of gross backlog (end-2023), €3.8 billion of revenue (2024E), and €1.8 billion of Adjusted EBITDA (2024E) which is expected to grow by mid-single compound average growth rate (CAGR) and underpins a strong, sustained cash flow generation outlook (see below).
2) What is the multiple implied by the transaction?
Based on the mid-point of 2024E Adjusted EBITDA outlook, the transaction represents an EV to Adjusted EBITDA multiple including synergies of 2.75 times or 3.50 times excluding non-cash items of around €175 million in 2024E which are expected to continuously reduce to €20-30 million by 2030 bringing cash EBITDA closer to accounting EBITDA.
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| $M | €M |
| Equity consideration | 3,100 | 2,844 |
| Net debt (end-2023) | 1,741 | 1,597 |
| Lease liabilities (end-2023) | 537 | 492 |
| Dividend paid to Intelsat shareholders | 130 | 119 |
| Expected U.S. C-band reimbursements | (475) | (435) |
| Enterprise Value | 5,033 | 4,617 |
| NPV of synergies | c.2,600 | c.2,400 |
| Enterprise Value (EV) including synergies (A) | 2,433 | 2,217 |
| Adjusted EBITDA (2024E) (B) | 870 - 900 | 800 - 830 |
| Adjusted EBITDA excluding non-cash revenue (C) | 680 - 710 | 625 - 655 |
| EV / Adjusted EBITDA (reported) (A / B) | 2.75 times |
|
| EV / Adjusted EBITDA (excluding non-cash items) (A/C) | 3.50 times |
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| Net Present Value of synergies includes c.€155 million (split c.70% in Year 1 and c.30% in Year 2) of estimated costs to realise anticipated synergies and use a discount rate of c.10%. | ||
