In an ironic twist, DISH Network parent company EchoStar Corp. has agreed to buy satellite system behemoth Hughes Communications, Inc. for $2 billion.
Hughes, in an earlier iteration, is the company that launched DISH rival DirecTV.
The deal calls for EchoStar to acquire all of the outstanding equity of Hughes and its subsidiaries, including its main operating subsidiary, Hughes Network Systems, LLC. The $2 billion deal includes Hughes debt expected to be refinanced in connection with the transaction. Hughes is the global leader in broadband satellite technologies and services, and a leading provider of managed network services. The transaction will greatly enhance EchoStar’s capabilities for broadband transport of video and data.
Under the terms of the transaction, which has been approved by the Boards of Directors of both companies, Hughes’ shareholders will receive $60.70 per share without interest, which represents a premium of 31% over Hughes’ unaffected closing share price of $46.43 on January 19, 2011. The transaction is expected to close later this year, subject to certain closing conditions including receipt of federal regulatory approvals. Investment funds affiliated with Apollo Management IV, L.P., who own a majority of Hughes’ outstanding stock, have approved the transaction by entering into a written shareholder consent.
Pradman Kaul, President and Chief Executive Officer of Hughes, stated, “We are very pleased to announce this transaction as it brings together the two premier providers of satellite communications services and delivers substantial value to our shareholders. By combining Hughes’ operational strength and proven record of customer satisfaction with EchoStar’s expertise in cutting edge satellite video technology, customers will benefit significantly from our shared institutional excellence.”
“There is a unique and compelling fit between Hughes and EchoStar,” said Michael Dugan, President and Chief Executive Officer of EchoStar. “With a rich engineering culture, an extensive fleet of owned and leased satellites, and experienced personnel in communications centers around the world, the combination of EchoStar and Hughes will create a powerful leader in video and data transport.”
To date, Hughes has shipped more than 2.5 million systems to customers in over 100 countries. Headquartered outside Washington, DC, in Germantown, Maryland, USA, Hughes maintains sales and support offices worldwide.
— By Scott Hettrick