LONDON — A transatlantic diplomatic row is brewing over the proposed acquisition by British private equity groups Apax Partners and Permiraof of Inmarsat, the global satellite carrier.
Senior Democrats in Washington have called on the Bush administration to review the deal on the grounds it could harm U.S. national security.
Apax Partners and Premira have bid $1.43 billion for Inmarsat and are completing negotiations for the satellite network operator, which counts the U.S. Navy as a client. Two U.S. buy-out specialists, Soros Private Equity and Apollo Management, have now joined forces on a counterbid for Inmarsat totaling $1.5 billion.
Sen. Ernest Hollings, D-S.C., the senior Democrat on the Senate Commerce Committee, urged Treasury Secretary John Snow to review the deal, citing Inmarsat's role as a communications supplier for the Navy.
"Given Inmarsat's substantial and unique relationship with the U.S. Navy and as the primary source for global maritime distress and safety service, we believe this transaction warrants a complete and comprehensive review by the full [Committee on Foreign Investment in the United States]," Hollings said in a joint letter with Sen. Daniel Inouye, D-Hawaii.
The lawmakers added: "We are concerned that two European-based equity funds were selected as 'preferred bidders' despite the presence of a higher offer from U.S.-based entities."
The row has added to the continuing tension over non-U.S. groups controlling assets on which the U.S. military depends. The Pentagon is monitoring the sale of Global Crossing to a telecommunications company in Singapore.
European government have warned Washington of renewed transatlantic trade tensions over so-called "Buy America" provisions included in spending bills. The provision requires the Defense Department to buy all weapons and supplies from U.S. manufacturers.
The issue has also taken on increased significance following the bankruptcies of other global mobile satellite providers. The closing could leave Inmarsat as the only source for the high-data rate, global mobile communications required by the U.S. military.
