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Will SATS Pay a Dividend Ever Again?

Will SATS Pay a Dividend Ever Again?

SATS will go ahead to buy Worldwide Flight Services – a global cargo handling business with presence across 18 countries in five continents.

This post was originally posted here. The writer, Willie Keng is a veteran community member and blogger on InvestingNote, with a username known as @Willie and has close to 130 followers.

At first glance, I thought this acquisition made much sense — SATS/WFS deal would push the combined companies to become a global cargo handling player.

In fact, SATS would eventually diversify revenues across Asia, Europe, the Middle East and Africa, and North America.

key trade routes and network coverage of the SATS Group and WFS Group

Source: SATS/WFS Prospectus 3 Jan 2023

Yet SATS shares have fallen more than 30%.

And even after the deal was approved last week, shares were still stuck in the bargain bin.

If the SATS/WFS deal had so much growth potential, why is the market still undervaluing its SATS shares?

And more importantly, will SATS still pay a dividend ever again?

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Is SATS Playing a Dangerous Game?

Is SATS Playing a Dangerous Game?

This is bad. I mean, the SATS/WFS buyout was just poor communication to shareholders.

This post was originally posted here. The writer, Willie Keng is a veteran community member and blogger on InvestingNote, with a username known as @Willie and has close to 120 followers.

SATS’ shares plunged 20% in a day after announcing that the WFS deal was an “all-equity financing” deal in Sep.

This meant SATS shareholders would have to fork out the entire S$1.7 billion sum.

Well, it turned out that wasn’t the case. Later on, SATS clarified the buyout would be a mix of equity, debt and cash.

The funny thing is though, why hasn’t SATS shares recovered?

Disclaimer — I’m no longer a shareholder of SATS as shared in Diligence.

At first glance, I thought SATS made a good acquisition. But I realized there’s something more about the deal.

Anyway, let’s find out what exactly happened.

SATS/WFS deal timeline — What happened?

  • 28 September: SATS announced to buy Worldwide Flight Services (WFS) for an “all-equity” funding of S$1.7 billion. Later, shares plunged 20% in a day.
  • 6 October: SATS clarified how it plans to fund the deal – mix of rights issue, debt and using its own cash.
  • 7 November: The Competition and Consumer Commission of Singapore (CCCS) accepted the SATS/WFS deal application. Now assessing if the buyout would breach anti-competition laws.
  • 9 November: SATS said rights issue will not exceed S$800 million.
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