Dish Network (NASDAQ:DISH) Corp announced on Tuesday plans to merge with satellite communications vendor EchoStar Corp, both companies being owned by billionaire Charles Ergen.
EchoStar shareholders will receive 2.85 shares of Dish Network (NASDAQ:DISH)'s Class A common stock for each EchoStar share held.
Shares of Dish climbed 9% to $8.34 in afternoon trading on Tuesday while EchoStar shares edged 1% higher to $23.71.
EchoStar was spun out from Dish back in 2008, and a reunion between the two companies will combine Dish's Pay-TV business and its 5G wireless network with EchoStar's satellite communications solutions.
“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," Ergen said in a statement.
“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," he added.
EchoStar CEO Hamid Akhavan will lead the combined company upon the completion of the merger, which is expected by the end of the year, while the current CEO of Dish, Erik Carlson, will leave the company after the transaction closes.
The combined company will be headquartered in Englewood, Colorado.
Dish’s market value is estimated at about $4.07 billion, while EchoStar is valued at $1.97 billion.
Dish Network also reported on Tuesday that its 5G network now covers more than 70% of the US.
Contact Sean at sean@proactiveinvestors.com