ST Engineering to fully acquire Belgium satellite telecoms group for 250m euros

ST Engineering announced on Wednesday that it has entered into a conditional share purchase agreement to acquire 100 per cent ownership of Belgium-based satellite telecommunications firm Newtec Group for 250 million euros (S$383 million) in cash.

Newtec is a technology provider in the satellite broadcast segment with unique ultra-high throughput capabilities and a strong presence in the European satellite telecommunications market, with a range of consumer satellite terminals and bandwidth efficiency technology.

The consideration translates to a multiple of 14.6 times Newtec's Ebita and 2.7 times revenue for the financial year ended Sept 30, 2018. The businesses, when combined, are expected to produce about S$200 million in value creation.

The group said that the proposed acquisition of Newtec will add intellectual property (IP), products and market access. ST Engineering will also continue to invest in Newtec in Belgium to position it to be the group's European centre for the satellite telecommunications business.

This will enable ST Engineering to meet demand across the full spectrum of the satellite telecommunications market, said the group.

With enhanced capabilities, the group said that it can better participate and lead the advancement of the industry to enable Smart Cities globally.

Capitalising on an enlarged IP and product portfolio, the group will be able to accelerate the deployment of satellite telecommunications-enabled 5G telco network, bringing high-bandwidth connectivity to remote regions. This will help bridge the digital divide and enable the development of new applications such as tele-medicine and tele-education, said the group.

It will also help to address the growing need for Internet of Things and machine-to-machine connectivity, where millions of devices and telematic sensor points are expected to be connected for surveillance, data gathering and big-data analytics.

Finally, the group said that the deal will enable it to provide end-to-end solutions for the mobility segment, enabling seamless Internet connectivity and remote monitoring for the aeronautical, maritime and connected car segments.

The proposed acquisition is not expected to have any material impact on the earnings per share of ST Engineering for the current financial year but is expected to be earnings accretive from the second year post acquisition.

It is also expected to reduce ST Engineering's audited consolidated net tangible assets by approximately S$0.11 per share from S$0.41 per share to S$0.30 per share, assuming the proposed transaction has been effected at the end of FY2018.

Newtec has consolidated net tangible assets of 5.1 million euros and consolidated net assets of 28.4 million euros as at Sept 30, 2018.

The deal is subject to regulatory approvals and conditions from authorities in the US, France and Austria, and is expected to be completed in the second half of 2019.