KKR & Co. plans to take private the German space and technology company OHB SE alongside the founding family as competition in the satellite sector heats up, according to people familiar with the matter.
The US buyout firm is set to announce on Monday an offer for the 30% of freely traded shares of the Bremen-based company in a deal that would value it at about €1 billion ($1.1 billion) including debt, said the people, who asked not to be identified because discussions are private.
A group of Fuchs family shareholders, who together own about 70% of the company, plan to retain close to that amount, the people said. KKR’s minority investment would help fund future investments and growth, the people said.
Shares of OHB are flat this year, giving it a market value of about €563 million.
OHB has built satellites and products for Europe’s Galileo navigation system, weather forecasting and the International Space Station. It’s also supplied technology to help search for life on Mars, track comets and support rocket launches, according to OHB’s website.
Family Company
The company’s customers include German and European governments. Given the sensitivities around space systems, aerospace and digital businesses, which have gained in importance amid Russia’s war with Ukraine, any deal could draw political scrutiny.
OHB said in its most-recent annual report that it is evaluating potential market access strategies for the Middle East and North America and has held discussions with potential partners in these regions.
Representatives for KKR and OHB couldn’t be immediately reached for comment outside regular business hours. OHB on Friday said it planned to release preliminary quarterly earnings on Monday.
OHB traces its roots back to a small workshop with five employees repairing hydraulic systems for the German armed forces. In 1981, businesswoman Christa Fuchs took over the firm, eventually roping in other members of her family and shifting its focus to the space industry.
Foreign investors have been flocking to family-owned German industrials businesses. In April, century-old manufacturer Viessmann agreed to sell most of its business to US air conditioner maker Carrier Global Corp. for about €12 billion. And a month later, Messer SE secured an investment from Singapore sovereign fund GIC Pte that values the industrial gas maker at more than €12 billion including debt.
A take private of OHB would be a bright spot in an otherwise subdued buyout market that’s been hampered by high financing costs and disagreements over valuations. The value of private equity acquisitions is down more than 50% to roughly $287 billion in 2023, data compiled by Bloomberg show. Still, KKR has been active in recent weeks, agreeing July 21 to buy US specialty chemicals maker Chase Corp. for $1.3 billion.
Space Launches
The transaction is the latest attempted deal in the satellite industry, which requires significant investment to build and launch spacecraft. Plans by billionaire Elon Musk and fellow tycoon Jeff Bezos to launch thousands of spacecraft into lower orbits and blanket the earth in fast broadband have pushed the traditional satellite industry into mergers.
In November 2021, California-based Viasat Inc. announced it would acquire Britain’s Inmarsat Group Holdings Ltd., while France’s Eutelsat Communications SA agreed in July last year to combine with UK-backed low-earth orbit venture OneWeb Ltd. Intelsat SA and SES SA were in merger discussions earlier this year to create a satellite giant before talks collapsed.
KKR has a track record in the satellite industry through its $3.5 billion acquisition of PanAmSat almost two decades ago. It also has experience in German aerospace, having listed plane engine maker MTU Aero Engines AG in 2005.
--With assistance from Dani Burger and Swetha Gopinath.
Author: Aaron Kirchfeld, Jan-Henrik Förster and Eyk Henning
