LITTLETON and ENGLEWOOD, Colo.—Dish Network Corporation and EchoStar Corporation have announced a definitive agreement for Dish Network to combine with EchoStar Corporation in an all-stock merger.
The deal recombines two companies that were separated in 2008 by Charlie Ergen, chairman of the Board of both Dish Network and EchoStar. Ergen, who controls both companies, founded EchoStar in 1980 and went on to become a pioneer in satellite delivered pay TV in the 1990s.
The merger, which has been the subject of media speculation for weeks, would strengthen Dish’s financial ability to better compete in the mobile arena where it is rolling out a 5G network and would mute some worries by analysts that the cash flow from Dish’s slumping pay TV business might not be sufficient to fund its 5G plans.
Prior to the announcement Dish was valued at about $4 billion and EchoStar at about $2 billion.
With Dish's 5G wireless network, which now covers more than 70% of the U.S. with full commercialization underway and the successful launch of EchoStar's JUPITER 3 satellite with significant available capacity for converged terrestrial and non-terrestrial services, the two companies said that the combined company will be well-positioned to deliver a broad set of communication and content distribution capabilities.
"This is a strategically and financially compelling combination that is all about growth and building a long-term sustainable business," Ergen said. "Dish's substantial past investments in spectrum and its wireless buildout, combined with EchoStar's recent launch of JUPITER 3, are expected to significantly reduce near-term CAPEX requirements. The transaction is expected to generate significant cost and revenue synergies, and the strong asset portfolio of the combined company paired with its enhanced free cash flow generation capability and strengthened capital structure are expected to drive long-term value creation for our shareholders and other stakeholders."
"From unconnected individuals in the most rural and remote regions of the world to the constantly evolving networks of private enterprises and government institutions, the connectivity landscape is rapidly changing," said Hamid Akhavan, President and Chief Executive Officer of EchoStar. "As a combined company, we will offer a broad suite of robust connectivity services, using a superior portfolio of technology, spectrum, engineering, manufacturing and network management expertise. Dish shares our customer-first culture, and together we will be well positioned to further scale and accelerate our strategy."
The transaction was negotiated and recommended by Special Committees of Independent Directors of both companies and unanimously approved by the Boards of Directors of both companies.
When the deal closes, Akhavan will serve as president and CEO of the combined company and Ergen will serve as executive chairman. John Swieringa, president & COO of Dish Wireless, will be president, Technology & Chief Operating Officer of the combined company. Erik Carlson will continue to serve as president and chief executive officer of Dish Network until closing of the transaction, at which time he will depart the business.
The Board of Directors will consist of 11 members: Seven Dish directors, three EchoStar independent directors, and Hamid Akhavan.
After the merger, existing Dish Network shareholders will own approximately 69% and existing EchoStar Corporation shareholders will own approximately 31% of the common stock of the combined company. The majority shareholder group has agreed generally not to vote Dish Class A shares owned by the majority shareholder group upon closing of the merger for three years, the intention of which is to ensure that, as a result of the merger, the group's voting power in Dish Network will not increase relative to current levels at Dish.
The transaction, which is also subject to regulatory approvals and customary closing conditions, is expected to be completed by year-end, the companies said.
