What does the takeover rejection mean for personal investors?
Inmarsat share price soars as it rejects takeover bid
- UK’s satellite communications group sees its price rise 13% following the rejection of takeover approach from US group EchoStar
- While shares have risen back to their highest point of the year, they still trade 35% below where they were this time last year
- The Share Centre recommends Inmarsat as a ‘buy’ for higher risk investors
Shares in satellite communications group Inmarsat rose a further 13% this morning in response to confirmation that the company had rejected a takeover bid from US group EchoStar Corp.
The shares rose steadily on Friday as rumours swirled in the market, ending the day up 11%. Inmarsat confirmed after the market closed that it had received a “highly preliminary” bid from EchoStar which it had rejected as it “significantly undervalued” the company, but no details of the offer were given.
While the shares have risen back to their highest point of the year, they are still trading 35% below where they were this time a year ago. The steep fall is clearly a big part of the reason behind EchoStar’s bid, but they will have to raise their offer to have a chance of being successful.
We retain our ‘buy’ recommendation as we believe that longer term attractions still remain with the shares. Orders from the Aviation division are increasing, government spending is once again picking up and the worst seems to be over in their Maritime division. Having said that, the market has already expressed its fears regarding the sustainability of the dividend and so the shares are suitable for investors taking a contrarian approach and willing to accept a higher level of risk.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.