Inmarsat rallies as Eutelsat says it's evaluating possible offer

"There can be no certainty any offer will be made, nor as to the terms of any offer," Eutelsat said, adding that a further announcement will be made in due course.

Eutelsat now has until the end of play on 23 July to either announce a firm intention to make an offer for Inmarsat or walk away.

The news comes just weeks after Inmarsat said that it had received and rejected a "highly preliminary" and indicative proposal from US rival Echostar. On 8 June, the company said that Echostar's offer had been rejected on the basis that it "very significantly undervalued" Inmarsat and its standalone prospects.

On 11 June, RBC Capital Markets put Eutelsat in the frame as a possible counter bidder for Inmarsat, alongside SES and ViaSat. It pointed out that both Eutelsat and SES are expanding fast into mobility as their core video business shrinks, however both struggle with leverage and a low relative rating.

"An acquisition of Inmarsat by either Eutelsat or SES would be very complementary," RBC said.

"All three operators have global operations and would see significant costs taken out. Strategically, neither Eutelsat nor SES are particularly focused on spectrum (in stark contrast to Echostar/DISH) but both are pivoting hard towards mobility, Inmarsat’s core business, in the face of structural decline of their own core video businesses.

"Eutelsat has better leverage and could also consider bidding, especially given its aspirations in global aviation. However, Eutelsat has two problems - like SES it doesn’t have highly rated equity to pay with, and secondly it is smaller than SES, so the proportionate effect of the acquisition (on dilution and leverage) is therefore more.

"Conclusion: Like SES, operationally it would fit very well but ETL doesn’t have either the balance sheet or expensive equity to pay for it."

At 1535 BST, Inmarsat shares were up 4.2% to 631.60p.