Steve Mehs
12-11-02, 04:03 AM
EchoStar paid Hughes Electronics $600 million in cash to close out their failed merger, the demise for which became final Tuesday. But the satellite TV company escaped having to purchase PanAmSat - a transaction that was required as part of the deal.
Under the merger proposal, EchoStar would've been required to buy Hughes' stake in PanAmSat whether or not the merger was finalized. Instead of EchoStar taking the commercial satellite operator, Hughes will instead retain its 81 percent ownership in PanAmSat.
Wall Street cheered the PanAmSat move for EchoStar, and the fact that the company won't take on a lot of debt. DISH shares closed up more than 10 percent to $21.09. Hughes shares fell slightly to $11.05.
Said William Kidd, satellite analyst with Lehman Brothers, "With this revised arrangement, EchoStar will emerge from this process with far less debt than initially envisioned and therefore much greater flexibility." Kidd also said the quick termination of the merger "was likely meant to accelerate News Corp.'s entry and GM's exit by avoiding litigation."
As for Hughes, Salomon Smith Barney analyst Armand Musey said the merger termination is "only somewhat negative for shareholders of GMH as much of the negative valuation impact of keeping PanAmSat should be offset by EchoStar's $600 million break-up fee."
However, PanAmSat shares were hit hard. Company shares fell 21 percent to $15.01.
As a result of the merger termination, EchoStar said it will take an approximate $700 million write off in the fourth quarter for the merger breakup fee and other related merger expenses.
From SkyReport (http://www.skyreport.com/skyreport/dec2002/121102.shtm#one) (Used with Permission)
Under the merger proposal, EchoStar would've been required to buy Hughes' stake in PanAmSat whether or not the merger was finalized. Instead of EchoStar taking the commercial satellite operator, Hughes will instead retain its 81 percent ownership in PanAmSat.
Wall Street cheered the PanAmSat move for EchoStar, and the fact that the company won't take on a lot of debt. DISH shares closed up more than 10 percent to $21.09. Hughes shares fell slightly to $11.05.
Said William Kidd, satellite analyst with Lehman Brothers, "With this revised arrangement, EchoStar will emerge from this process with far less debt than initially envisioned and therefore much greater flexibility." Kidd also said the quick termination of the merger "was likely meant to accelerate News Corp.'s entry and GM's exit by avoiding litigation."
As for Hughes, Salomon Smith Barney analyst Armand Musey said the merger termination is "only somewhat negative for shareholders of GMH as much of the negative valuation impact of keeping PanAmSat should be offset by EchoStar's $600 million break-up fee."
However, PanAmSat shares were hit hard. Company shares fell 21 percent to $15.01.
As a result of the merger termination, EchoStar said it will take an approximate $700 million write off in the fourth quarter for the merger breakup fee and other related merger expenses.
From SkyReport (http://www.skyreport.com/skyreport/dec2002/121102.shtm#one) (Used with Permission)