Intelsat to be bought by group of investment funds

NEW YORK -- 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 disclosed this year.

The Bermuda-based company, created in 1964 through a partnership among 147 nations, said yesterday it has signed a definitive agreement with Zeus Holdings Limited, 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 percent stake, followed by France Telecom and VSNL of India with 5 percent each. 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, The Blackstone Group and Kohlberg Kravis Roberts & Co. Both recently made other acquisitions in the satellite industry, which prompted worries that government regulators might object to their involvement due to antitrust concerns, according to a source familiar with the bidding.

Intelsat ''was interested in a transaction with a high degree of certainty and could close in a relatively short amount of time," the source said, speaking on condition of anonymity.

Intelsat provides voice, data, and video broadcast services to wireline networks in about 200 countries and territories.

As part of the deal, Zeus also will be assuming about $2 billion of debt from Intelsat. Zeus plans to finance an undisclosed portion of the $3 billion price tag by issuing new Intelsat debt.