EchoStar Corporation and Hughes Communications have agreed a deal which will see EchoStar acquire all of the outstanding equity of Hughes and its subsidiaries including its main operating subsidiary, Hughes Network Systems, LLC in a transaction valued at approximately $2 billion, aimed at creating a worldwide leader in satellite-delivered video and broadband services.
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 per cent over Hughes’ unaffected closing share price of $46.43 on January 19th, 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, said the dealbrought together the two premier providers of satellite communications services and delivered substantial value to 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,” he stated.
“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.”
Intelsat and Inmarsat were also reported to be potential bidders for the 57 per cent stake that Apollo had put up for sale in January.
The deal comes after speculation that AT&T might bid for Dish Network the ‘consumer arm’ of Echostar.