Hughes shareholders will receive $60.70 a share without interest, a 31 percent premium over its closing share price of $46.43 on Jan. 19, the companies said today in a statement. Reuters reported Jan. 20 that Hughes was looking for a buyer.
The deal adds broadband data services to EchoStar, which gets most of its revenue from Dish Network Corp., the second- largest U.S. satellite-TV provider. Hughes, based in Germantown, Maryland, runs broadband satellite networks for businesses, governments and consumers. The total value of the deal, including debt, is $2 billion.
The purchase “brings together the two premier providers of satellite communications services and delivers substantial value to our shareholders,” Pradman Kaul, chief executive officer of Hughes said in the statement.
The deal, expected to close this year, was approved by investment funds affiliated with Apollo Management IV, LP, which own a majority of Hughes outstanding stock, the statement said. It also has the approval of the boards of the two companies, it said.
It’s the second satellite deal for EchoStar Chairman Charlie Ergen this month. On Feb. 1, Dish, where Ergen is also chairman, agreed to buy DBSD North America Inc. for about $1 billion.
The Hughes acquisition values the company at 8.9 times the company’s earnings before interest, taxes, depreciation and amortization during the past year. In 10 similar deals in the past decade, acquirers paid a median of 6.2 times trailing Ebitda, according to Bloomberg data.
Hughes fell $2.67, or 4.3 percent, to $59.11 at 9:55 a.m. New York time in Nasdaq Stock Market trading. EchoStar, based in Englewood, Colorado, fell 78 cents, or 2.6 percent, to $29.10.
Deutsche Bank Securities served as financial adviser to EchoStar, while Barclays Capital advised Hughes.