US telco Dish Network has announced plans to merge with satellite communications vendor EchoStar.
Both companies, which are owned by billionaire Charles Ergen, confirmed the plans in a statement today (August 8).
Ergen, who co-founded Dish, owns more than half of its outstanding shares and owns nearly 60 percent of EchoStar. The announcement of the merger follows reports last month that a deal was on the cards.
EchoStar was spun out from Dish back in 2008, as Dish held onto the TV business while shedding the satellite infrastructure that beamed content into them.
A re-merger between the two will combine Dish's Pay-TV business and its 5G wireless network with EchoStar's satellite communications solutions.
EchoStar stockholders will receive 2.85 shares of Dish Network's Class A common stock.
The deal will see EchoStar's CEO Hamid Akhavan lead the combined company upon the completion of the deal, which is expected by the end of the year. Ergen will support the company as executive chairman.
The board of directors will be made up of 11 members, consisting of seven Dish directors, three EchoStar independent directors, plus Akhavan.
"This is a strategically and financially compelling combination that is all about growth and building a long-term sustainable business,” said Ergen.
“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.”
Dish has been focusing heavily on its cellular offerings and hit its 5G broadband coverage target set by the Federal Communications Commission (FCC), as the company extended its coverage to over 70 percent of the US population in June.
The market value of Dish is estimated to be around $4.07 billion, while EchoStar is valued at $1.97 billion. The combined company will be headquartered in Englewood, Colorado.
Once completed, existing Dish Network shareholders will own approximately 69 percent and existing EchoStar Corporation shareholders will own approximately 31 percent of the common stock of the combined company.