Telesat is seeking at least US$6 billion in the sale; if the buyout is not quite that high, it is also considering a special dividend as an alternative, read a report in Bloomberg citing "people with knowledge of the matter."
Both potential suitors have made large acquisitions in the past few months. Just on Wednesday, private equity firm Carlyle acquired 61.77 per cent of the Metrologic Group for C$52 (€38) per share.
Echostar, which owns and maintains the satellite fleet for the Dish Network, bought out Hughes Communications Inc. for US$2 billion this February.
Telesat has been looking for strategic alternatives since the strong United States dollar began pulling down its profits last year. In November, Telesat's Paul Bush told OBJ that an initial public offering "was always in the plans."
Telesat's net income was US$228 million in 2010, including a foreign exchange gain of $164 million. In 2009, it posted an income of $431 million on a foreign exchange gain of $335 million.
As the fourth-largest fixed satellite services provider worldwide, Telesat is said to be looking for ways to take a run at the top three, who are substantially larger.
“(Shareholders are) interested in terms of growing, they're interested in terms of expanding," said Mr. Bush, Telesat's vice-president of North American sales.
That same day, Bloomberg released a report saying Telesat brought on JPMorgan Chase & Co., Morgan Stanley and Credit Suisse Group AG to court interested suitors.
However, in conference calls since then Telesat has repeatedly turned away any discussion about its future, saying only that its board of directors is considering an initial public offering among other options.
The Ottawa company is dually owned by a United States majority economic holder – New York-based Loral Space and Communications – and a Canadian-owned holding company, which includes the Public Sector Pension Investment Board, with a majority voting interest.
Telesat used to be owned by Bell Canada Enterprises, but was sold in 2006 for C$3.42 billion after BCE Inc. – weighed down under a number of new companies it had rapidly acquired in the early 2000s – found itself struggling with debt and sought to divest its underperforming assets.
BCE remains Telesat's largest customer. Currently, Telesat has 12 satellites in orbit as well as three others being built.
The satellite firm, which has 250 employees in Ottawa, was initially formed in the 1960s as a partnership between the federal government and Bell, according to Mr. Bush.
