[Satellite News 02-14-11] EchoStar entered into an agreement to acquire Hughes Communications and its subsidiaries, including its main operating subsidiary Hughes Network Systems, for about $2 billion, EchoStar announced Feb. 14.
    The transaction, which has been approved by the boards of both companies as well as by Apollo Management, Hughes’ previous majority stockholder, will see EchoStar pay Hughes’ shareholders $60.70 per share without interest. The payment includes a 31 percent premium from Hughes’ Jan. 19 closing price of $46.43. In January, analysts speculated that Apollo’s auction of Hughes would generate a per-share price in the mid-$60 region.
   EchoStar president and CEO Michael Dugan said the transaction aims to enhance his company’s video and data broadband transport capabilities. “There is a unique and compelling fit between Hughes and 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,” Dugan said in a statement.
    The transaction is expected to close later this year, subject to closing conditions and federal regulatory approvals.
    Apollo Management has held a 57 percent stake in Hughes since 2004. Raymond James analyst Chris Quilty told Satellite News that Apollo’s desire to auction off the company might have been an effort to avoid a liquidity trap. “We suspect that Apollo may have grown frustrated with Hughes’ consistently depressed ‘public company’ valuation (historically two to four times its forward EBITDA, as compared to seven to 10 times for ViaSat, Hughes’ closest peer). … We have regularly argued that Hughes’ valuation discount is primarily a byproduct of the stock’s minimal float and poor trading liquidity,” he said.
    EchoStar and sister company Dish Network have been involved in several major acquisitions over the past few months.
    Dish Network entered into an agreement Feb. 1 to acquire hybrid satellite and terrestrial communications company DBSD North America for about $1 billion. DBSD, which filed for chapter 11 bankruptcy protection in May 2009, will receive an $87.5 million debtor-in-possession credit facility from Dish Network in exchange for the inclusion of the 7.5 percent interest accrued on DBSD’s existing debt to the acquisition price. The credit facility, which remains subject to approval by the U.S. Bankruptcy Court, will consist of a non-revolving, multiple draw term loan.
    That acquisition was followed by a Credit Suisse report, issued Feb. 10, claiming that AT&T was looking to acquire Dish Network. “What AT&T believes, I think, is if you bundle Dish and AT&T wireless on a national basis, that would reduce churn for all products and potentially drive penetration. Not only would it expand the customer base of AT&T but also lower churn because of the new stickiness,” Credit Suisse Analyst Jonathan Chaplin said in the report.
    In January, EchoStar’s Advanced Technologies subsidiary also acquired Move Networks, a video streaming technology developer based in Utah, inheriting Move Network’s global customer base of service providers and content owners in the United States, Germany, Latin America and the Middle East. The company said the acquisition also enables EchoStar to expand its portfolio of television technologies serving cable, satellite, telcos and IPTV video providers.
    “We first introduced our products in 2006 and quickly proved that adaptive streaming was the breakthrough invention that proved primetime television programming and professional, long-form video can be reliably delivered over the Internet at the high-resolution quality that is intended. We look forward to the joint efforts of Move and EchoStar engineers in furthering technology innovation in online video delivery worldwide,” Move Networks Founder Drew Major said in a statement.
    Financial terms of the Move Networks acquisition were not disclosed.