Antitrust Lawyer Blog Commentary on Current Developments

DOJ Clears Intelsat’s Purchase of PanAmSat

On May 26, Intelsat Ltd. announced that it received clearance from the Department of Justice for its $6.4 billion cash-and-debt deal to buy rival PanAmSat Holdings Corp. Under the terms, Intelsat would pay $25 in cash for each share of PanAmSat and assume about $3.2 billion in debt. The Bermuda-based satellite communications company said last August it would buy PanAmSat in a deal that would give the company nearly two dozen satellites above North America.
The transaction creates a near duopoly over North America between Intelsat and SES Americom Inc., a unit of Luxembourg-based SES Global SA. Due to that market concentration, some industry watchers predicted a difficult antitrust review possibly resulting in divestitures. However, the two companies countered that Intelsat and PanAmSat operate in largely distinct businesses that are complementary to each other. PanAmSat receives about two-thirds of its revenue from transmitting for television networks and about half of its business is in the United States. Intelsat has traditionally made its money in the telephone and data transmission area and has a much larger international presence. The companies have also argued that while there might be a duopoly with regard to satellite firms, these firms increasingly have been forced to compete with terrestrial fiber network operators able to transmit video signals across their lines underground. The arguments were persuasive to the DOJ, which according to the companies closed its antitrust investigation without seeking any conditions on the proposed merger.