SkyTerra, Harbinger Agree to Merge
A new company formed by Harbinger Capital Partners will acquire SkyTerra for $277.5 million and take the publicly traded company private, if shareholders and regulators approve, SkyTerra announced Wednesday. The new company, yet to be named, would pay $5 a share, 56 percent more than the closing price Tuesday, SkyTerra said. The company’s stock price surged almost 39 percent to $4.71 Wednesday in response to news of the acquisition.
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Harbinger, headed by billionaire investor Phillip Falcone, already holds about 48 percent of SkyTerra’s voting common stock -- “virtually assuring” shareholder approval -- thanks to the large investment last July, said SkyTerra spokesman Tom Surface. The company hasn’t set a date for the shareholder vote, Surface said. Harbinger has made a big push in recent years to get involved in the satellite business. Last year, Harbinger agreed to provide $500 million in financing to SkyTerra in four rounds. The three completed have given SkyTerra $400 million in capital. Last year, Harbinger Capital Partners also approached Inmarsat about a possible acquisition (CD July 28/08 p7) but hit a regulatory snag that prevented a deal.
While SkyTerra expects the transaction to be completed by early next year, not everything is set in stone. The company is awaiting FCC approval and New York law firm Wolf Haldenstein said it begin investigating possible breaches of fiduciary duty by SkyTerra’s board. The firm says Harbinger may be underpaying for the company.
In response, Surface, the company’s spokesman, said, “The reasoning of the special committee and the board with respect to the approval of the transaction will be set forth in a proxy statement, which we expect to file promptly.”