It all depends where you put the cursor. EchoStar’s latest informal offer values Inmarsat at 532 pence per share, up 27% from where it was on June 7, and up 40% from its average over the three months ending June 7. Inmarsat management says it’s not enough. Credit: Google Finance

UPDATE: EchoStar let the July 6 deadline slip by without making a formal bid for Inmarsat, but said it could return to the table even before the six-month regulatory no-bid period if a third party were to go after Inmarsat or if Inmarsat’s management changed its mind about EchoStar’s offer.

Here is EchoStar’s statement, issued about an hour before the 5 p.m. UK time deadline:

6 July 2018

A statement by EchoStar Corporation

No intention to make an offer for Inmarsat plc

Further to the announcement made by Inmarsat plc (“Inmarsat”) on 8 June 2018, EchoStar Corporation (“EchoStar”) announces that it does not intend to make an offer for the entire issued and to be issued share capital of Inmarsat pursuant to Rule 2.7 of the Code.

As a result of this announcement, EchoStar and any person acting in concert with it, is bound by the restrictions contained in Rule 2.8 of the Code.

Under Note 2 on Rule 2.8 of the Code, EchoStar, and any person acting in concert with it, reserves the right to set aside the restrictions in Rule 2.8 within 6 months following the date of this announcement, in the following circumstances:

(i) with the agreement of the board of Inmarsat;

(ii) following the announcement of a firm intention to make an offer for Inmarsat by a third party;

(iii) if Inmarsat announces a “whitewash” proposal (see Note 1 of the Notes on Dispensations from Rule 9) or a reverse takeover (as defined in the Code); and

(iv) if there has been a material change of circumstances (as determined by the Panel on Takeovers and Mergers).

PARIS — Mobile satellite services provider Inmarsat on July 6 said it had rejected a revised — and still informal — takeover bid by EchoStar Corp. that valued Inmarsat at 532 UK pence per share, with half to be paid in cash and half in EchoStar stock.

EchoStar had until 5 p.m. UK time (noon ET) to formalize its offer or be forced to abandon its interest in Inmarsat for six months under UK financial regulation. It let that deadline pass, but said the six-month no-bid rule would not stop it from returning if circumstances changed. One official said it’s not out of the question that Inmarsat’s board could entertain a more-attractive EchoStar bid during that six-month period.

EchoStar said the offer represents a 27% premium from where London-based Inmarsat’s stock was trading on June 7, the day prior to EchoStar’s first takeover proposal; and a 39% premium on Inmarsat’s convertible bonds.

Inmarsat stock has moved dramatically in the past year as investors soured on its S-band in-flight-connectivity business, the slow growth of its historic L-band mobility segment and prospects for its global Ka-band service in light of the coming Ka-band broadband competition: https://bit.ly/2Id1vK1

In a statement, EchoStar said a merger “is strategically compelling” but left about all mention of Inmarsat’s L-, S- and Ka-band spectrum, which given EchoStar owner Charlie Ergen’s history has to be EchoStar’s top-shelf consideration for going after Inmarsat.

“The combined group would be one of the world’s leading satellite providers and be well supported by a global portfolio of complementary assets and service offerings,” EchoStar said. “EchoStar believes that the improved proposal represents a  compelling opportunity for Inmarsat’s shareholders to realize certain value from their investment in Inmarsat while also participating meaningfully in the upside potential of the entire company.”

EchoStar said it would move forward with its bid if it obtains an extension of the firm-offer deadline of 5 p.m. London time today, July 6. EchoStar said it also needs to complete a due-diligence examination of Inmarsat’s business and would need a positive recommendation to Inmarsat shareholders from Inmarsat’s board of directors.

That seems unlikely at this point. Inmarsat issued a statement July 6 that said the new offer, like the previous one, “very significantly undervalued inMarsat and its stand-alone prospects. The board remains highly confident in the independent strategy and prospects for Inmarsat.”

Whether EchoStar will formalize its bid by 5 p.m. UK time today (12 noon ET) is unclear. In principle, it must do so or sit on the sidelines for six months before renewing its interest.

That’s the principle. It is not entirely clear whether UK rules would prohibit Inmarsat from reviewing a fresh bid after July 6 even if it came before six months.