DISH Network Corp. and EchoStar Corp. have reached an agreement that transfers the bulk of the company’s Broadcast Satellite Service (BSS) business to DISH in an all-stock transaction.
The deal will see DISH take on nine direct broadcast satellites and “the certain key employees responsible for satellite operations;” licensing for the 61.5-degree orbital slot; and “select real estate properties.”
In exchange, EchoStar shareholders will benefit from the distribution of 22.9 million shares of DISH stock.
As of Monday’s Opening Bell on Wall Street, DISH was priced at $35.33, at or near its top performance since April 2018. However, DISH shares are far below their pricing seen two years ago, when DISH average closing prices were at $62.76 per share.
The year 2017 saw DISH acquire the EchoStar assets it needed to deliver “the DISH TV and Sling TV customer experiences,” DISH President/CEO Erik Carlson said.
However, key broadcast satellite operations and services remained with EchoStar.
“This transaction brings those operations, including the BSS satellites, associated assets and key team members, in house,” Carlson said. “We expect those additions will create operational efficiencies and improve both free cash flow and EBITDA.”
DBS spacecraft involved in the transaction will include EchoStar VII, EchoStar X, EchoStar XI, EchoStar XII, EchoStar XIV, EchoStar XVI, EchoStar XXIII, Nimiq 5 and QuetzSat-1.
The transaction is structured in a manner to be a tax-free exchange and is expected to close in the second half of 2019, subject to satisfaction or waiver of closing conditions.
BofA Merrill Lynch acted as financial advisor to DISH Network; Sullivan & Cromwell LLP acted as legal counsel for DISH Network.