EchoStar Targets Wireless Spectrum with Hughes Acquisition
EchoStar Corp. has announced plans to acquire all of the outstanding equity of satellite technology provider Hughes Communications and its subsidiaries. The $2 billion transaction includes Hughes’ main operating subsidiary, Hughes Network Systems, as well as Hughes debt, which is expected to be refinanced in connection with the transaction.
The deal marks yet another chapter in EchoStar’s recent attempt to expand its broadband video and data transport capabilities. The Hughes acquisition follows several recent deals to obtain increasingly valuable wireless spectrum, including deals for satellite companies like TerreStar and DBSD.
“There is a unique and compelling fit between Hughes and EchoStar,” said Michael Dugan, President and CEO 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.”
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 Jan. 19. The transaction is expected to close later this year, subject to certain closing conditions including federal government approval. 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.
“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,” says Pradman Kaul, President and CEO of Hughes. “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.”