EchoStar to acquire Hughes Electronics for 3.54 times revenue

Weekly Corporate Growth Report, Nov 5, 2001

Featured Transaction

The Deal: EchoStar Communications Corp. has agreed to purchase Hughes Electronics Corp. for $25.8 billion in cash and stock. The acquisition will give EchoStar control of the nation's number one satellite television provider, DirecTV. After news of the transaction was announced, shares of Hughes lost five cents to $15.35, and EchoStar shares fell $1.14 to close at $25.26.

Discussion: Hughes Electronics, the operator of DirecTV, is the largest United States direct broadcast satellite provider. Hughes is a unit of General Motors, which owns all of the company's assets and holds about 30 percent of its tracking stock.

EchoStar Communications is the number two United States direct broadcast satellite TV provider, behind DirecTV. The company operates the DISH Network, providing programming to nearly 6.5 million subscribers in the continental United States. Subsidiaries develop DBS hardware such as dishes and integrated receivers and deliver video, audio and data services. EchoStar has teamed up with Gilat Satellite Networks and Colorado startup WildBlue to develop satellite-- based two-way broadband Internet access.