UK watchdog to examine Viasat’s Inmarsat takeover

Britain’s competition regulator has referred Viasat’s (VSAT.O) $7.3 billion takeover of satellite rival Inmarsat for an in-depth investigation, it said on Friday, raising the prospect of the deal being delayed.

United States-based Viasat’s plan to buy the British company was announced late last year and was expected to close in the second half of this year, but the Competition and Markets Authority (CMA) has 24 weeks to complete its investigation.

The CMA’s concern is that the tie-up could hamper competition in the aviation connectivity market, leading to airlines facing higher prices for on-board Wi-Fi.

British and U.S. authorities have already given security clearance for the takeover.

Viasat offers connectivity services to residential, aviation and defence customers in North America while Inmarsat provides satellite-based communications services to the shipping and aviation sectors as well as government departments.

The two companies said they remain confident that the deal would go through and increase availability of affordable in-flight Wi-Fi, noting that rivals Panasonic (6752.T) and Intelsat account for more than 75% of the market on long-haul flights.

Viasat and Inmarsat’s joint statement said they will communicate any expected delay to the closing of the deal as their engagement with the CMA progresses.

For its part, the watchdog said the deal requires further investigation because it could result in a “substantial lessening of competition within a market or markets” in the UK, based on the information it currently has.