By Sinead Carew
NEW YORK, Jan 24 (Reuters) - U.S. satellite operators PanAmSat Corp and Intelsat Ltd. both said on Friday they backed away from acquisition talks with Eutelsat but, Intelsat said it was still in discussions but needed more financial diclosure.
PanAmSat Chief Executive Joe Wright said he would not enter acquisition talks again until the position with Eutelsat's shareholders, all of which have different agendas, is clearer.
Intelsat spokeswoman Susan Gordon said: "We haven't actually halted discussions. We do have an offer on the table and are ready to move forward when we get tangible evidence that Eutelsat wants to move forward."
"They haven't given us the necessary due diligence needed for the transaction," Gordon said. "We certainly would welcome an accelerated process."
The U.S. companies made rival bids in December understood to be worth more than $3 billion for Eutelsat, the largest European satellite company, with a view to gaining a entry point into Europe and achieving growth in a depressed market.
But Eutelsat is owned by a patchwork of shareholders including France Telecom and BT Group Plc and the French Government is hoping to block a sale to non-European companies, Reuters learned from sources last year.
"It's has nothing to do with Eutelsat or PanAmSat. Its that the process is not necessarily in sync with what I call an orderly sale or merger of a company," Wright told Reuters.
"We just thought the process itself was very complicated for any strategic company that's interested in getting together with (Eutelsat)," Wright added.
PROBLEMS AND OPTIONS
One problem for a single company wanting to buy Eutelsat is the difficulty stitching together a majority stake.
France Telecom which owns 23.1 percent, said last year could sell its stake to cut its debt pile.
Britain's BT owns 17.5 percent, while a vehicle that is 70 percent-owned by Lehman Brothers and 30 percent held by Telecom Italia owns 20.5 percent.
Deutsche Telecom sold a 10.87 percent stake in the company to Italian publisher De Agostini as late as last year.
"We expect Eutelsat to remain independent. It's not likely they will sell out to a non-European company," SG Cowen analyst Thomas Watts said in a research note.
"We expect Eutelsat to provide liquidity to its larger shareholders through sales of stakes to financial buyers." Watts added, predicting that financial investors in the company would eventually conduct an public offering of the operator.
Both PanAmSat and Intelsat say they could look at other options outside of an Eutelsat deal.
"There are other things to be done," Gordon said. "The market is moving toward consolidation and we're going to examine the value of assets that become available."
Aside from Eutelsat ambitions PanAmSat has other questions about its future as its 81 percent owner Hughes Electronics thrashes out a plan with its own parent General Motors after its failed sale to EchoStar last year.
But Wright said the Eutelsat U-turn had nothing to do with its parent's issues and simply because of a lack of alignment between Eutelsat's shareholders and managers.
Wright also said the decision was not related to the amount of money required to buy the company.
While Wright still believes his company is the best possible fit for a Eutelsat merger he said he would consider discussing other opportunities with the operator.
"Maybe it would be better to look at joint ventures or some other kind of affiliations. We'd be happy to look at it," Wright said.
PanAmSat shares closed down 62 cents, or more than 4 percent at $14.50 on the Nasdaq stock market on Friday.