Lesser Law Group

Satellite companies' failed merger leads to litigation

California business relationships that start with a promising future can sometimes end in an acrimonious dispute. One telecommunications company, Intelsat, known for delivering broadband services through satellites, is suing a company in which it previously invested, OneWeb. It is also suing OneWeb's biggest investor, SoftBank. Intelsat accuses the other companies of conspiring to steal its proprietary information, breaching contracts and committing fraud. The lawsuit emerged from the cooperation agreements concluded between OneWeb and Intelsat following the latter's $25 million investment in the former.

In 2015, Intelsat and OneWeb concluded an agreement in which Intelsat customers were able to access OneWeb's communication services. Intelsat also received the rights to exclusively distribute OneWeb services to aviation, maritime, government and oil and gas industries in exchange for its investment. The following year, after a $1 billion investment from Softbank, OneWeb agreed that Softbank would be the exclusive global distributor of its communication services. Intelsat objected to the deal, and a contract amendment was reached. Intelsat would keep its distribution rights but would arrange services through SoftBank. Intelsat says that it disclosed confidential information about the four markets and its plans for selling services with OneWeb and SoftBank.

Later in 2017, the companies discussed a merger between Intelsat and OneWeb. If it came to fruition, SoftBank would invest $1.5 billion in Intelsat, and the combined companies would market global telecom services. However, the merger fell through after OneWeb's debt holders failed to agree. After the failed merger, Intelsat says that OneWeb and SoftBank stopped honoring their existing agreement, even though it never came to an end.

Companies may begin partnerships that have the potential for strong growth and rewarding profits, but they can break down when disputes go unresolved. An attorney can provide advice to corporate clients and represent them in business litigation in the event that the dispute can't be resolved out of court.

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