Cobham Again Bids To Acquire Danish Antenna Builder

by

PARIS — Britain’s Cobham plc said April 10 it is willing to pay nearly $320 million to purchase the 74.4 percent of satellite communications terminal builder Thrane & Thrane of Denmark that it does not already own to create what it said will be the world’s biggest satellite antenna business.

It said it is willing to settle for a lesser stake in Thrane if the Danish company’s shareholders do not all rally behind Cobham’s bid.

Dorset, England-based Cobham, whose current satellite communications business generates about $160 million per year in revenue, was turned away by Thrane management in March following a similar offer. Thrane said at the time that it would nonetheless begin a review of strategic alternatives.

The March 26 resignation of Thrane’s chairman created what Cobham views as a fresh opening to Thrane shareholders, and Cobham announced April 5 it had purchased a combined 22.74 percent of Thrane’s equity from Jupiter Asset Management and other shareholders.

Combined with its previously owned shares, the April 5 purchase has given Cobham a 25.6 percent ownership stake in Thrane. The company’s offer for the rest of Thrane will be made at the same per-share price of 420 Danish kroner ($74) as the April 5 purchase and not a penny more, Cobham officials said in an April 10 conference call with investors.

The offer price, Cobham said, represents a 43 percent premium over where Thrane stock was trading before Feb. 24, when Thrane management announced that it had received an unsolicited takeover bid.

Thrane’s board of directors said April 7 it was standing firm that the Cobham offer might not be the best available.

“The board continues the initiated strategic review of the opportunities available to Thrane & Thrane,” the company said in a statement. “The [Cobham April 5 acquisition] appears to reaffirm that Thrane & Thrane holds a very strong position and attractive opportunities for further investment. As announced previously, the board expects to be able to announce the results from the strategic review no later than May 14.”

Cobham said its offer for the rest of Thrane will be delivered by April 13 and will remain valid for a month, with a possible extension up to 10 weeks under Danish law. If it is not accepted by enough shareholders to give Cobham a 50.01 percent stake, the offer will expire. Cobham officials said the company in that case would content itself with whatever share level it has received at the 420 kroner offer price.

In an April 10 statement, Cobham said its current satellite telecommunications businesses, mainly involving mobile communications terminals, generates some 100 million British pounds ($159 million) in revenue, mainly from the SeaTel, TracStar and Omnipless businesses.

Cobham in 2011 was selected by mobile satellite services operator Inmarsat of London as the initial maritime partner for Inmarsat’s $1.2 billion investment in Global Xpress, a network of three all-Ka-band satellites to provide a broadband complement to Inmarsat’s traditional L-band mobile satellite communications business.

In the 12 months ending April 30, 2011, Thrane & Thrane reported revenue of 1.09 billion kroner, or about $192 million. Most of it was in maritime mobile satellite communications. For the nine months ending Jan. 31, 2012, Thrane & Thrane generated revenue of 778 million kroner.

The purchase of the Danish company, if it succeeds, would more than double Cobham’s satellite telecommunications business. Cobham said that combining its current satellite operations with those of Thrane would yield more than 2 million pounds in annual pretax savings to be realized by eliminating overlaps in the two companies’ engineering, production and distribution operations.

These synergies would result even if a minority of Thrane shareholders refuses the Cobham bid.

 

RELATED ARTICLE

Thrane Suitor Is Willing To Wait It Out