The company that sought to revolutionise global communications with its catchphrase ''Geography is history'' now finds itself the target of a takeover bid which may bring it out of its tangled history that had seen its value plummet from the $6 billion during inception to a mere fraction of it today. Ex-Motorola venture Iridium Holdings LLC is being acquired by an affiliate of private equity firm Greenhill & Co. for $591 million.

GHL Acquisition Corp., an eight-month-old special purpose acquisition company that has raised $400 million of gross proceeds, was founded by New York-based investment bank Greenhill & Co. Inc. The deal includes $100 million in cash - $77 million from GHL and the rest from Greenhill. In addition, Iridium shareholders will get $360 million in GHL shares. The total value of the deal also includes $131 million of debt Iridium held as of 30 June.

Greenhill will invest $22.9 million in Iridium prior to the purchase by affiliate GHL Acquisition Corp. and use $324 million to pay off debt and other costs, New York-based Greenhill said. Iridium shareholders will receive about $77 million in cash and 36 million shares in the company to be called Iridium Communications Inc.

Iridium said the proceeds of the transaction would enable Iridium to be debt free and well positioned to develop its next generation satellite constellation, "Iridium NEXT" to replace the existing network of 66 satellites. Only a few months back, a similar transaction involving London-listed satellite network operator Inmarsat had failed to materialise (See: Inmarsat stock declines in London after Harbinger breaks off takeover talks)

Scott L Bok, CEO of GHL Acquisition, said, "After carefully considering numerous potential acquisition candidates, we are pleased to have identified such an attractive partner in Iridium and its management team. Iridium is the fastest-growing full-service voice and data MSS provider and one of only a handful of major players in its industry, which has significant barriers to entry.''

Reflecting on the niche category Iridium operates in, he added, ''It has developed substantial scale in terms of revenue and cash flow, and has an impressive track record of growth across each of its five subscriber verticals. At the agreed transaction valuation, Iridium should be a compelling alternative to investors in a fast growing sector with few participants."

Matt Desch, CEO of Iridium, said, "We are excited to partner with GHL Acquisition and Greenhill in this transaction. Greenhill has a long track record of value creation in the public equity markets, and we believe its commitment to Iridium will be extremely valuable as we continue to grow our business and look to deploy our next generation constellation.''

Speaking on the benefits of the buyout, he added, ''Not only will this transaction permit us to have a strong balance sheet and potential future funding from GHL Acquisition's future warrant proceeds, but it will also provide us access to Greenhill's expertise and network of relationships as we develop Iridium into the future. This transaction positions us well to meet and exceed the needs and expectations of our customers, suppliers, employees and stockholders.''

Robert H. Niehaus, senior Vice President of GHL Acquisition, added, "Iridium has a superior product relative to its competitors and provides services that are considered mission-critical by its subscriber base. The company also operates in an industry with significant barriers to entry in the form of spectrum and orbital space allocations, lead-times and high switching costs for subscribers. We look forward to supporting the management team, under Matt Desch's leadership, as it continues to create value for Iridium's customers, deliver profitable growth, and realize Iridium's full potential."

The transaction is subject to regulatory approvals and is expected to close in early 2009. The combined company, to be 55 per cent owned by GHL, would be renamed Iridium Communications Inc. and apply to go public on the NASDAQ. GHL executive Niehaus would serve as chairman, but Iridium's existing management team, including CEO Desch, are to stay in place.

Iridium, in a prior incarnation, launched its "anywhere" mobile phone service a decade ago. But it signed up just a fraction of the subscribers that were stipulated when it secured its loans, and in 1999 Iridium LLC filed for bankruptcy protection with debts of $4.4 billion. The company had just 55,000 subscribers by the time it halted commercial service in 2000.

Later that year, a company called Iridium Satellite LLC bought Iridium's satellites and other assets for $25 million - a fraction of the $6 billion it had cost Motorola Inc. and other investors to develop it. The new Iridium relaunched mobile phone service in 2001. Now it boasts more than 305,000 subscribers and "complete coverage of the entire Earth including oceans, airways and polar regions."