What's going on?

The potential bidding war for satellite company Inmarsat took an interesting turn on Tuesday. Eutelsat had initially thrown its hat into the ring as a suitor but made a rapid about-turn. Inmarsat�s stock spun, too, sinking by 12%.

What does this mean?

Inmarsat provides phone and wireless data services � like 4G � to people via satellites around the world. France�s Eutelsat does the same thing and is the third largest global operator of its kind.


The proverbial bidding war came about after American company Echostar said it had amassed a 3% stake in Inmarsat on Friday (its offer to buy the company earlier in June was rebuffed). Eutelsat then said it was considering an offer, too � but decided against it after pressure to make a firm decision from the UK�s takeover regulator.

Why should I care?

For markets: Inmarsat�s stock could be in for a bumpy ride.

Inmarsat�s shares soared with the news of Echostar�s initial bid � and the prospect of a counter bid � but they�re now in decline. The UK�s takeover laws mean this rollercoaster ride could last a bit longer, since Eutelsat now can�t put in a bid for Inmarsat of any kind unless a formal offer is made by someone else. Echostar has to submit a final bid within a month or it�ll be tapped out by regulators.

The bigger picture: Land grabbing and cost �synergies� make M&A likely.

In an industry with slowing growth opportunities, bundling revenues together � and streamlining costs that may have otherwise been duplicated (a.k.a. generating synergies) � is a tidy way for satellite companies to increase profits. Bidding wars among giants for the smaller companies could be an ongoing trend for the industry.