Swedish Space Corp. To Sell Satellite Unit

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PARIS — The government-owned Swedish Space Corp. is soliciting bids for its satellite division and is expected to conclude a sale by the end of the year, Lars Persson, the company’s chief executive, said Oct. 7.

The satellite division, which was responsible for Europe’s Smart-1 lunar orbiting mission and, more recently, the two Prisma satellites that are testing a new satellite propellant and formation-flying techniques, is likely to be purchased by a strategic investor, Persson said in an interview.

Persson did not disclose whether any formal bids had been received. He said he expected several companies will be interested in taking over a division whose technologies include propellants that are both user friendly and more efficient, and the ability to fly satellites in extremely close proximity.

“The consolidation of the space industry and of space projects in Europe” is what is driving the sale, Persson said. “We have seen it in recent projects like the Sentinel [Earth observation] satellites and the recent MTG [meteorological] satellite bidding. Projects are getting too big to remain isolated.”

The intellectual property rights associated with the satellite division’s technologies will be part of the package, he said.

The satellite division counts about 60 employees and reports, on average, 20 million euros ($17.5 million) in annual revenue, Persson said. Swedish Space Corp. (SSC) has hired an outside financial adviser to help with valuation assessments and with organizing the bidding, he said.

While the government has not given orders about who would be an acceptable owner, Persson said it is clear that prospective buyers realize that the division will need to remain mostly in Sweden in order to take advantage of Swedish government space spending. Persson said SSC is not ruling out selling 100 percent of the division, but could keep a minority stake.

Several companies in the past couple of years have demonstrated a willingness to consolidate Europe’s space industrial sector, which has been created over the past three decades in part as companies are fed with European Space Agency (ESA) and national space agency contracts on condition that the funds and the industrial base remain in the home country.

The 18-nation ESA has begun taking steps to modify the way it awards contracts so as not to block what government and industry officials say is a necessary reduction in the number of small, independent companies that have trouble surviving in the commercial market.

ESA spending for 2010 and 2011 will be flat from 2009, and the agency’s near-term financial prospects show little chance of major budget increases, giving small companies nowhere to turn but to their national governments — where spending is also flat, for the most part — and the commercial market.

Persson said the sale of the satellite division should be seen as a way to give Swedish-born satellite technologies room to grow inside a larger corporate structure in ways that SSC cannot assure.

Several companies have been active in the past couple of years in rolling up small operations into a single corporation while retaining the staff in their home countries to assure government support. Ruag Space AG of Zurich, whose equity is owned by the Swiss government, has purchased the largest space industry contractors in Switzerland, Austria and Sweden and would be one logical candidate to buy SSC’s satellite division, industry officials said.

Other potential buyers would include Qinetiq of Britain, which has a presence in Belgium and the United States, and OHB Technology of Germany, which in recent years has developed divisions in Italy and Belgium.