Investment Group to Buy Intelsat for $3 Billion

Intelsat Ltd., the pioneering satellite operator founded by a multinational government consortium, is being acquired by a group of investment funds for about $3 billion in cash, the third major buyout in the industry announced this year.

The Pembroke, Bermuda-based company, created in 1964 through a partnership among 147 nations, said Monday that it had signed a definitive agreement with Zeus Holdings Ltd., an investment consortium formed by Apax Partners, Apollo Management, Madison Dearborn Partners and Permira.

Intelsat, privatized in 2001, is closely held by major investors, led by Lockheed Martin Corp. with a 24% stake, followed by France Telecom and VSNL of India with 5% apiece. The company has twice dropped plans for an initial public offering of stock, first in 2002 and then this past May.

Zeus edged out two prominent buyout firms, Blackstone Group and Kohlberg Kravis Roberts & Co. Both recently made other acquisitions in the satellite industry.

In April, KKR led a $3.55-billion buyout of PanAmSat Corp., one of Intelsat’s two main rivals. In June, Blackstone agreed to acquire New Skies Satellites of the Netherlands for $956 million.

Intelsat’s satellites provide voice, data and video broadcast services to wire-line networks in about 200 countries and territories.

As part of the deal, Zeus also will assume about $2 billion worth of debt from Intelsat.

Intelsat recently expanded its network fleet to 28 satellites with the purchase of five spacecraft from Loral Space & Communications Ltd. for $1.1 billion, a deal financed through the sale of $1 billion worth of bonds.