Thrane Suitor Willing To Bide Its Time

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PARIS — Cobham plc’s desire to purchase satellite communications antenna manufacturer Thrane & Thrane has been known for several months, but until April 10 it was unclear how badly the British company wanted the deal.

In an April 10 conference call with investors, Cobham officials said they have decided to continue pursuing Thrane, despite Thrane management’s previous rebuff because the logic of merging two satellite communications ground gear manufacturers is too compelling to ignore.

Cobham officials further said that to sweeten the deal for Thrane management and employees, Cobham will move its SeaTel marine antenna business from California to be co-located with Thrane’s facility in Lyngby, Denmark. Thrane’s current management would be left in place, Cobham said.

If Cobham gets 100 percent of Thrane, its entire satellite communications ground segment business, now reporting some $159 million per year in revenue, would be transferred to Denmark.

“This is very unusual for us,” Cobham Executive Chairman John Devaney said during the conference call, referring to Cobham’s decision to pursue a potentially hostile bid. “We normally only do things on a 100 percent agreed basis with every acquisition that we make.”

Cobham may yet secure the approval of the needed 50.01 percent of Thrane shareholders to proceed with the acquisition. But to demonstrate its persistence, Cobham has made clear that it would retain its current 25.6 percent ownership of Thrane, plus any additional shares that it purchases in the current offer, for the foreseeable future even if the company is stopped short of a majority ownership.

The synergies Cobham said would be a clear benefit of the deal would be lesser, but the company is hopeful that, sooner or later, the logic of the merger will be obvious to the majority of Thrane shareholders. Until that day, Cobham will wait things out.

“Clearly it’s unusual to be contemplating an acquisition where you may end up with different levels of ownership,” Cobham Chief Financial Officer Warren Tucker said during the conference call. “But we felt that the strategic rationale and the benefits of combining the businesses was so compelling in this case that we were willing to take a long-term and patient view and, if necessary, go through a couple of different levels of ownership before hopefully, eventually, putting the two units completely together.”

Dorset, England-based Cobham has specialized in C-, Ku- and X-band satellite ground terminals, with the latter used mainly by military customers. Thrane has focused on L-band terminals, mainly for use by customers of mobile satellite services provider Inmarsat of London.

Inmarsat is moving to expand its offer to include broadband capabilities that are unavailable in L-band by launching the Inmarsat Global Xpress service in 2015 aboard three all-Ka-band satellites. Cobham has won a $40 million contract to be the initial maritime partner for Global Xpress.

This contract win, in late 2011, suggests that Cobham was already moving closer to Thrane’s business even before its initial takeover offer in March was rejected by Thrane management. For the nine months ending last Jan. 31 — Thrane’s fiscal year ends April 30 — Thrane’s business was 58 percent maritime satellite communications terminals, 22 percent land-mobile terminals, 12 percent aeronautical and 8 percent fixed-land Earth stations.

Thrane employs some 600 people in Denmark, the United States, Norway, Sweden, China and Singapore.

Cobham’s current business is focused on stabilized marine satellite antennas and very small aperture terminals, or VSATs. VSATs often linked to Ku-band telecommunications satellites, whose owners are adding new beams to reach beyond their terrestrial focus to capture maritime communications customers.

Cobham acquired SeaTel in 2003 and said SeaTel’s revenue and R&D investment have both doubled since the purchase. Cobham purchased TracStar, a specialist in land-mobile satellite communications gear, in 2005 and has grown the business by 60 percent since then, Cobham said.

 

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