Inmarsat Shars Rise After Harbinger Capital Approach

LONDON -(Dow Jones)- Shares in satellite communications company Inmarsat rose sharply Monday after it confirmed it had received a "very preliminary approach" from activist hedge fund Harbinger Capital Partners.

Harbinger Capital Partners already owns 28% of Inmarsat, as well as other satellite investments.

"Discussions between the parties are at a very early stage and there can be no certainty that any offer will ultimately be made for Inmarsat or as to the terms of any such offer," Inmarsat said in a statement.

The company said a further announcement will be made "when appropriate."

At 1211 GMT, Inmarsat shares traded up 6.97%, or 34.5 pence, at 529.5 pence, in an overall slightly higher London market, giving the company a market capitalization of GBP2.4 billion.

Harbinger confirmed its preliminary approach, but said no decision had yet been made and a lengthy regulatory approval process would be required if it were to make an offer.

Inmarsat provides satellite telephony and e-mail services to the broadcasting, shipping and airline industries and was bought by a consortium of private-equity firms for $1.5 billion in 2003.

The company went public in 2005.

An analyst, who asked not to be named, said he wasn't surprised by the approach as Inmarsat is a cash generative business. He also said the news was good for Inmarsat shareholders.

"The market will now take a good look at whether Harbinger has the ammunition to pay (for) Inmarsat," said one London-based trader.

In March, Inmarsat posted a 39% rise in pretax profit for 2007. Still, shares fell at the time on concerns that its capital expenditure would be higher than expected but have since recovered. In May it said it was on track to meet its full-year revenue and cashflow targets.

U.S.-based Harbinger already has a more than 40% stake in TerreStar which in turn owns about 40% of U.S.-based satellite communications company Skyterra Communications.

A Wall Street Journal report earlier Monday said Harbinger had hired Merrill Lynch & Co. to advise it on the Inmarsat holding. Merrill also underwrote Inmarsat's 2005 initial public offering.

-By Erica Herrero-Martinez, Dow Jones Newswires; 44 20 7842 9353; erica.herrero-martinez@dowjones.com (Ishaq Siddiqi contributed to this article)

(END) Dow Jones Newswires

Posted to the site on 7th July 2008