Inmarsat's hedge fund suitor drops its bid plan

An American hedge fund's attempts to corner space and the market in communications satellites has foundered on the fears of the regulatory authorities.

Earlier this month Harbinger Capital, a hedge fund which made a substantial fortune from the US subprime crisis, said it had opened talks to take control of Inmarsat, the London-quoted satellites group.

The manoeuvre, which was thought to value Inmarsat at £2.3 billion, set alarm bells ringing.

Harbinger has already built up a 29% stake in Inmarsat but also holds large chunks of its major rivals - a direct 47% of SkyTerra Communications and a 38% stake in TerreStar, which in turn is a large shareholder in SkyTerra.

Inmarsat said today that Harbinger had walked away from a deal.

Harbinger explained: "Discussions have taken place between Harbinger and Inmarsat and their respective advisers and these discussions have focused upon the lengthy regulatory and competition approval process required to effect an offer for Inmarsat.

"In light of this lengthy process, which could take up to 18 months, Harbinger does not consider it appropriate to make a firm offer for Inmarsat at this stage."

Shares in Inmarsat fell 62p to 450½p.