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(Bloomberg) -- Eutelsat Communications SA and OneWeb Ltd. are set to combine in an all-share deal valuing the UK satellite operator at $3.4 billion, a step toward creating a European champion to rival the likes of Elon Musk’s SpaceX.
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OneWeb shareholders will hold 50% of Eutelsat, which will continue to be listed in Paris and will ask to be listed on the London Stock Exchange, the companies announced in a statement Tuesday. The announcement confirms talks made official on Monday and first reported by Bloomberg last week.
The deal is the latest merger in what has become a race by corporations and governments to offer rapid connectivity via low-orbit satellites. Both the UK and French governments have stakes in OneWeb and Eutelsat respectively, and the UK will continue to own a special share, giving it certain veto rights over strategic decisions such as the location of the firm’s headquarters.
Although shareholders will split the company, the deal bears the hallmarks of a takeover by Eutelsat. OneWeb will keep its own branding and operate the low-orbit business of the combined group, which will have a primary listing in Paris. Eutelsat chairman Dominique D’Hinnin is set to be chairman of the combined entity, with his OneWeb counterpart Sunil Bharti Mittal as co-chair and vice president. Eutelsat Chief Executive Officer Eva Berneke will run the new group.
The UK government has agreed a range of national security rights, and for OneWeb to prefer procurement for manufacturing from businesses in the UK, according to a statement from the UK government. Both the UK and France will have board representation.
Founded in 2012, OneWeb collapsed in 2020 when lead investors pulled their money at the height of the coronavirus pandemic. The UK government put forward about $500 million as part of a $1 billion partnership with Bharti Global, in a deal pushed by Dominic Cummings, a former adviser to Prime Minster Boris Johnson, under the guise of protecting a potentially vital tech asset following Brexit.
The deal will give Eutelsat a “unique position” on the market and has the potential to generate 1.5 billion euros ($1.53 billion) in increased revenue as well as investments and cost synergies, the companies said.