PLYMOUTH, Massachusetts – Satellite fleet operator Space Communications (Spacecom) of Israel’s principal shareholders on Aug. 24 said they had agreed to sell the company to a Beijing conglomerate that has created a Luxembourg entity to manage the business for $285 million in cash.
The transaction’s terms are pending the successful entry into service of Spacecom’s Amos-6 telecommunications satellite, built by Israel Aerospace Industries and scheduled for launch Sept. 3 aboard a SpaceX Falcon 9 rocket.
Spacecom’s satellite fleet, three satellites plus the coming Amos-6, will continue to be operated from Israeli territory under the terms of the agreement.
Spacecom’s owners, led by privately held Israeli telecommunications group Eurocom, have been trying to sell the company for several years. On recent attempted transaction with Spanish satellite fleet operator Hispasat came undone because of Israeli regulatory issues.
Spacecom’s shareholders, but not Spacecom itself, issued a statement Aug. 24 saying the sales price represents a 41 percent premium over where Spacecom stock was trading before rumors of the sale surfaced. Spacecom is traded on the Tel Aviv Stock Exchange.
According to the statement, Beijing Xinwei Technology Group is buying Spacecom and will integrate it into an existing Luxembourg company called Luxembourg Space Telecommunication S.A., which will be the legal purchaser of Spacecom.
Beijing Xinwei also owns an Israeli company, named Big Bird Ltd., which will handle the transaction and assure a continued Israeli presence for the company’s assets.
Spacecom Chief Executive David Pollack said in a statement that the transaction will give the company room to grow in a challenging market.
“The global market of communication satellites is undergoing a consolidation process, enabling the merging companies to improve their competitiveness,” Pollack said.
“Further to contacts with various entities, the negotiations with the Beijing Xinwei Group matured into this transaction, reflecting a substantial premium on the market price. Beijing Xinwei is a strategic partner, expert in the field of telecommunication, planning to expand its business in the communication satellites field. The merger will provide the Company with financial strength, and will enable further development and growth. The transaction is performed in accordance with Space Communication’s license terms, stipulating, inter alia, that the satellites will be operated from Israel, and that the Company shall remain an Israeli company, regardless of the identity of the shareholders of the Company.
Spacecom shareholders described Beijing Xinwei Technology Group Co. Ltd. as “a Chinese conglomerate with vast global operations, inter alia, in the USA, Ireland, Russia, Nicaragua, Brazil and more. The company provides solutions to telecom providers, and active in the cellular communication field, equipment sales, and communication satellites. The company is traded on the Shanghai Stock Exchange at a market price of US$ 7.6 billion, and its balance sheet present assets in the amount of US$ 2.7 billion. Xinwei was incorporated in December 1995, by two telecom researchers, Chen Wei and Xu Guanhan and other entities. Xinwei’s headquarter is located in Beijing, China.”