News Corp.’s DirecTV said Tuesday it has inked a deal to sell its PanAmSat satellite unit to Gotham-based buyout firm Kohlberg Kravis Roberts & Co. in a cash deal worth about $4.3 billion.
PanAmSat makes and operates satellites, currently managing a fleet of 29 birds, 24 of which it owns outright. It beams TV programs around the world. The company has been on the block since News Corp. acquired DirecTV parent Hughes Electronics last year.
The sale means a tidy inflow of cash into News Corp.’s coffers and reinforces the conglom’s determination to “transform the Hughes corporate structure to a single business with a single focus on DirecTV,” said DirecTV Group CEO Chase Carey.
The pricetag, which values PanAmSat at $23.50 a share, includes the assumption of about $750 million in debt. Carey said the all-cash offer provided the best value to PanAmSat shareholders.
As part of the deal, DirecTV and PanAmSat said they extended and enhanced agreements between them to maintain continuity of services for Hughes Network Systems unit and DirecTV Latin America subsids — and to ensure future revenue streams for PanAmSat.
The deal — which needs approval by the Federal Communications Commission and by shareholders of PanAmSat, which is 80% owned by DirecTV — is expected to close in the second half of this year.
The auction attracted bids from several groups of private equity firms, which have been aggressively shopping in all sectors lately. Other interested parties were said to include Blackstone Group, Carlyle Group and Providence Equity Partners, Apollo Group and Madison Dearborn, Thomas H. Lee Partners, Quadrangle Group and Bain Capital, as well as Charlie Ergen’s EchoStar.
KKR’s offer was said to be significantly higher than the others.