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GE May Sell Satellite Unit to SES for $4.5 Billion

Editorial Department

NEW YORK -- Societe Europeenne des Satellites SA of Luxembourg is the front-runner to acquire General Electric Co.'s satellite-services subsidiary for between $4.5 billion and $5 billion in cash and stock, according to people familiar with the negotiations.

In the latest sign of satellite-industry consolidation, the companies are proposing a deal that would merge the broad North American satellite presence of the GE (GE) unit, GE American Communications Inc., known as GE Americom, with SES's strong financial and technical resources and international satellite network, these people said. General Electric's financial arm, GE Capital, would maintain a significant minority stake, about 25%, in the combined entity and would have board representation. However, SES would control the operations, these people said.

While SES is the leading bidder and has had the most detailed discussions with GE, other potential suitors have surfaced in the past few weeks and may top SES's proposal. Notably, Echostar Communications Corp. (DISH), Loral Space & Communications Ltd. (LOR) and international satellite operator Intelsat all have had recent discussions with GE, and Echostar seems the most eager to strike a deal, according to one person close to the deliberations.

The SES proposal would catapult a pair of robust regional players to form the fourth truly global satellite-services providers, after PanAmSat Corp. (SPOT), Greenwich, Conn., Lockheed Martin Corp. (LMT), Bethesda, Md., and New York-based Loral. Together, SES and GE Americom would have sufficient size, geographic range and varied offerings to be able to compete in every important segment of the consolidating industry, analysts and industry officials say.

While the two sides are in advanced discussions, they are still weeks away from clinching a deal, with several details, including a final price, still to be worked out, these people cautioned. Alternatively, the result could be some sort of joint venture, or the negotiations could fall apart.

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