ALEX BRUMMER: France’s Eutelsat and government-backed merger plan recalls UK’s flawed space odyssey
On a much smaller scale, the proposed “merger of equals” between France’s Eutelsat Communications and government-backed satellite company OneWeb is reminiscent of the ill-fated 2012 effort to embroil BAE Systems and EADS (now renamed Airbus).
That deal crashed amid a strong media campaign (by this newspaper), a then-welcomed intervention by fund manager Neil Woodford, and a veto from Germany’s Angela Merkel. There are many moving parts in the satellite link.
The idea is to combine OneWeb’s growth model and innovation with the cash-generating French business.
The proposed “merger of equals” between France’s Eutelsat Communications and government-backed satellite company OneWeb recalls the ill-fated 2012 effort to confuse BAE Systems and EADS (now renamed Airbus)
Presented as a merger between equals, it is not about that at all, even if the British and French governments find themselves with the same issue. OneWeb’s latest fundraising has valued the group – bought out of bankruptcy by Boris Johnson (at the request of Dominic Cummings) – at £2.8bn compared to a pre-deal value of £2.1bn for Eutelsat.
The difference in valuation is undoubtedly filled because the French group holds a 23% stake in OneWeb. The reality is that the new group will be headquartered in Paris, the managing director of the combined company will be Eva Berneke of Eutelsat and the main listing will be on the French Stock Exchange.
Britain will end up with a shadow seat in London for OneWeb and a secondary listing, even though the London market is more liquid. The UK should be reassured that the chairman of the enlarged group will be Sunil Bharti Mittal, described by insiders as an Anglophile.
Raising enough investment capital for OneWeb to be a credible challenger to other low-orbit satellite companies such as Elon Musk’s SpaceX’s Starlink is a huge ask. Yet it’s the kind of imaginative project destined to be part of Britain’s post-Brexit future.
It’s strange to cast the UK’s fate with France as it plays hell at Dover Paris has taken full control of EDF creating uncertainty for the UK’s nuclear future and President Macron has been lukewarm in his support for Ukraine for fear of upsetting his pal Vladimir Putin.
When private equity groups fought over ownership of Morrisons, the biggest concern was that the generous price paid, funded by a mountain of debt, would make the supermarket group less competitive and harm UK food safety.
Adding to the complexity is the presence of China as Eutelsat’s fourth largest shareholder with 5% of the stock. It’s hard to believe that the UK’s US ally will be more enthusiastic about this than the Pentagon was about BAE’s association with Airbus. What is most confusing about this deal is the position of the current embalmed British government.
Business Secretary Kwasi Kwarteng favors the deal as he fears the cost to the Exchequer of deeper UK involvement. As he has already signed the fate of defense innovators Ultra Electronics and Meggitt into dangerous foreign hands, one should not be surprised by his support for low orbit fusion.
Current efforts to strike a deal with US satellite group Viasat, so it can move forward with its takeover of UK satellite champion Inmarsat, suggests the government is willing to sacrifice national security, R&D and intellectual property on the altar of Mammon.
In the Conservative leadership race, candidates have struggled to be visionary. The candidate who supports British industry, R&D and innovation, and avoids the death star of Parisian ownership, would get my vote. An independent BAE is a tremendous asset for the UK in an uncertain world.
When private equity groups fought over ownership of Morrisons, the biggest concern was that the generous price paid, funded by a mountain of debt, would make the supermarket group less competitive and harm Britain’s food security. Brittany. So it happened. Goldman Sachs, which built up the debt, struggled to sell it. Struggling with rising interest rates, Morrisons cannot afford to invest in consumers and is losing market share.
Efforts to reduce debt by refinancing the food production branch undermine the exclusivity of the Morrisons model. What would the late Sir Ken Morrison say?
The most shocking aspect of the £14.4million fine imposed on KPMG for ‘false’ and ‘fabricated’ documents during the audit of construction giant Carillion is that we are no longer shocked.
Despite appalling behavior and lengthy bans on the audit team involved, the business gets going. The average partner received a 20% raise in 2022 to £688,000 after the firm declared a £100m bonus pot. The punishment does not match the crime.