TRW Inc. announced it will integrate its interests in Odyssey Telecommunications International Inc. with ICO Global Communications, marking the first consolidation move in the mobile satellite industry.
TRW said it is acquiring an equity interest in London-based ICO and will receive 1.5 million ICO shares, or about 7 percent of ICO’s current outstanding shares, having a face value of $150 million and making TRW one of ICO’s leading shareholders.
TRW’s move means the demise of Odyssey. The Cleveland-based company was the lead partner in Odyssey along with Canadian telecommunication operator Teleglobe. Odyssey planned to launch 12 medium-earth-orbiting satellites and offer voice and data services worldwide via pocket telephones by 2001. TRW now plans to give back the license the Federal Communications Commission granted it in January 1995 and will focus its efforts on assisting ICO in obtaining authority for its 10-satellite MEO system to operate in the United States and other countries, said TRW.
The companies anticipate TRW will provide engineering expertise to ICO. Both have agreed to grant each other cross licenses for their respective patents relating to global telecommunications systems. TRW and ICO also agreed to dismiss pending patent litigation between the two. In addition, TRW will receive certain distribution rights in the United States for ICO products and services, said the companies. According to these agreements, TRW will invest about $50 million in ICO, and ICO will pay TRW $25 million at closing and pay an additional $25 million by mid-1999.
“TRW’s investment demonstrates its confidence in ICO becoming a success,” said Olof Lundberg, ICO chief executive officer. “It strengthens our market position in the United States by giving us an additional strong partner and access to some key vertical markets. TRW also will back up our regulatory team and enhance our efforts to expand in markets where it enjoys considerable goodwill.”
TRW Chairman and CEO Joseph Gorman said the move is consistent with the company’s strategy to grow its telecommunications business. ICO has raised more than $2 billion in equity commitments and has been constructing its system for more than two years. It expects to start service in 2000.
The boards of directors of both companies have approved the agreement, which is expected to close during the first quarter. TRW representatives likely will join the ICO board of directors.