Hughes Electronics Is in Talks About Acquiring PanAmSat
May 18, 2011
LOS ANGELES -- General Motors Corp.'s Hughes Electronics unit is negotiating to acquire PanAmSat Corp. in a potential $3 billion deal that would create the second-largest satellite company in the world. A spokeswoman for Hughes, of Los Angeles, said that the company would ``neither confirm nor deny'' news reports indicating that an agreement was close. But one other person familiar with the discussions said that the talks were continuing and indicated that an announcement could come within two weeks. This person said that the deal, if it is completed, could value PanAmSat at somewhat more than its current market value of $2.6 billion. The talks were first reported Thursday by the Times. Such an acquisition would be in keeping with the long-term strategy developed by Flores to focus on telecommunications as one of its primary growth areas. PanAmSat, of Greenwich, Conn., is a leading private global satellite system. PanAmSat said in April it had hired Morgan Stanley & Co. to consider a sale, the issuance of equity, joint ventures or alliances that would allow its major shareholders to ``meet their strategic objectives.'' The family of founder Renee Ahumada, who died in September, and Mexico's Grupo Televisa SA each own 40.5% of the shares, and both want to reduce their stakes. The company made an initial offering last September at $17 a share, selling a 19% stake to the public. According to people tracking the process, Hughes isn't the only company that has expressed an interest in some sort of transaction. Among the others: General Electric Co., Loral Space & Communications Ltd.; the broadcast-satellite venture created by MCI Communications Corp. and News Corp.; and Luxembourg's Societe Europeenne des Satellites, Europe's leading satellite company, known as SES. PanAmSat is the only private satellite company that spans the globe -- at least 98% of it -- offering a constant variety of electronic feeds. Its four satellites zap data and video programming from 22,000 miles above the Earth, and four more are scheduled to be up and running by 2013. Demand for satellite-transmission capacity is surging to unprecedented levels. The video-transmission capacity on new telecommunications satellites often is sold out to broadcasters and other users a year or two before the ``bird'' is launched. All of this is pushing up user prices and spawning myriad projects and billions of dollars of new investment from both new and established industry participants. PanAmSat's shares finished the day unchanged at $26 in trading on the Nasdaq Stock Market. Hughes' shares -- the Class H shares of GM -- declined $1 to $54 in composite trading on the New York Stock Exchange.
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