Canada’s Public Sector Pension Investment Board and the Ontario Teachers’ Pension Plan are putting together a $7 billion deal to acquire Canadian satellite company Telesat Holdings Inc.
When all is said and done, each pension fund will have a 50 percent stake in the company.
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Under the terms being discussed, the funds will acquire Loral Space & Communications Inc. (LORL:US), a publicly traded shell company that owns 63 percent of Telesat, for about $85 a share (LORL:US), or $2.6 billion, said the people, who asked not to be named discussing private information. While a deal could be announced next month, talks may fall apart again given the parties’ inability to reach an agreement in the past, the people said.
The pension funds are planning to wind up with equal ownership and voting stakes in Telesat, the people said. PSP, which currently holds about 67 percent of the voting rights and 37 percent of the equity in Telesat, would increase its ownership to 50 percent and reduce its voting rights, while Ontario Teachers’ would control the other half of the company.
Telesat has been on and off the block for years. Loral and PSP, which already owns 37 percent of Telesat, called off a sale effort in 2011, after offers from bidders including EchoStar Corp. and Carlyle Group LP fell short of expectations. Talks started again this year before stalling in June because Mark Rachesky, Loral’s largest shareholder, couldn’t agree with PSP on a price to sell the company, failing to bridge an equity gap of about $100 million, people said then.
Three-way talks between Loral, PSP and Ontario Teachers’ restarted last month after Ontario Teachers’ and PSP raised their offer, the people said, leading to renewed negotiations.
The Public Sector Pension Investment Board manages about $97 billion in assets. The Ontario Teachers’ Pension Plan manages $138 billion in assets.