EchoStar Corporation has announced an agreement to acquire all of the outstanding equity of Hughes and its subsidiaries including its main operating subsidiary, Hughes Network Systems, in a transaction valued at approximately $2 billion (€1.485) billion, including Hughes debt expected to be refinanced in connection with the transaction.
Under the terms of the transaction, which has been approved by the boards of directors of both companies, Hughes’ shareholders will receive $60.70 (€45) per share without interest, which represents a premium of 31% over Hughes’ unaffected closing share price of $46.43 (€34) 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, who own a majority of Hughes’ outstanding stock, have approved the transaction by entering into a written shareholder consent.
Pradman Kaul, president and CEO of Hughes, said in a statement, “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 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.”
Apollo acquired Hughes in 2004, when then-owner DirecTV agreed to strike a 50-50 joint venture with Apollo to run the business. EchoStar formally spun off DISH’s set-top business in 2008, the company remains the technology provider to DISH, including owning most of the satellites DISH uses for its broadcasting.
In 2001 EchoStar Communications and Hughes Electronics announced a merger, at the time combining Hughes’ DirecTV with EchoStar’s Dish Network, in a deal valued at $25.6 billion. A year later, the two companies called off the merger because regulator FCC wouldn’t approve the merger of the two DTH platforms.
