By Ben Martin
LONDON (Reuters) - Shares in British satellite operator Inmarsat (L:ISA) leapt on Friday after its U.S. suitor EchoStar (O:SATS) disclosed stakes in the London-listed company's equity and debt.
Inmarsat stock jumped by as much as 11 percent after EchoStar said that it had a near 3 percent shareholding in the British company, as well as a 10.4 percent position in its convertible bonds.
The disclosure, which was made in a stock exchange filing, comes after Inmarsat announced earlier this month that it had rejected a takeover approach from EchoStar because it "very significantly undervalued" its business. Inmarsat did not disclose the terms of the bid.
The Colorado-based company now has until July 6 to make a firm offer or walk away from the FTSE 250 group, under rules set by Britain’s Takeover Panel.
Founded in 1979, London-based Inmarsat was set up by the International Maritime Organization as a way for ships to stay in communication with shore and make emergency calls.
Since then, the group has become a private company, providing communications for aircraft and governments as well as shipping.
The EchoStar approach has sent Inmarsat share price surging, swelling its market value to almost 2.8 billion pounds ($3.72 billion) amid speculation that a bidding war could erupt for the British company. Analysts have identified ViaSat (O:VSAT) and Eutelsat Communications (PA:ETL) as possible counterbidders.
At Inmarsat's current share price, EchoStar's equity stake is worth about 82 million pounds ($108.9 million).
Its position in the convertible bonds represents a principal amount of $67.4 million, according to the filing. The bonds, which are eligible to convert into shares, are due to mature in September 2023 and were issued in August 2016.
EchoStar's stakebuilding in Inmarsat predates its bid approach, according to a person familiar with the matter, who added that the U.S. company first took a position in the British firm's shares in 2015.
Under UK rules, EchoStar was required to disclose its position by today, the person added.
Inmarsat shares were up 8.9 percent at 597 pence in afternoon trade in London.