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In this article
This is a strategically and financially compelling combination that is all about growth and building a long-term sustainable business, Ergen, chairman of both Dish and EchoStar, said in a statement.
As of Monday's close, EchoStar had a nearly $2 billion market value, while Dish's market value was just above $4 billion, according to FactSet.
The deal reunites two businesses that have been separate for about 15 years, after Ergen spun EchoStar out of Dish in 2008. Founded in 1980, EchoStar sold satellite dishes before launching its own subscription satellite service in 1995.
Since the spinoff, Dish has acquired assets from EchoStar, including its broadcast satellite service, while EchoStar has focused on satellite communications, such as its Hughes subsidiary's consumer internet service.
The merger will exchange 2.85 shares of Dish common stock for each share of EchoStar stock, a 12.9% premium for EchoStar shareholders as of the July 5 trading close. The companies noted that was the last full trading day prior to media speculation regarding a potential transaction, with Semafor reporting July 6 that a potential combination was under consideration.
EchoStar CEO Hamid Akhavan will serve as CEO of the combined company. Erik Carlson, the current CEO of Dish, will leave the company after the transaction closes.
Ergen and Akhavan will join CNBC's David Faber at 10:15 a.m. ET for an exclusive interview.
Dish — which owns Boost Mobile, Ting, Republic Wireless and Gen Mobile — is looking to expand beyond satellite TV into the mobile telecom market, with its Dish Wireless business. As part of Tuesday's merger announcement, Dish said its 5G network now covers more than 70% of the U.S.
Dish has also expanded into streaming TV services, through its Sling TV subsidiary.
EchoStar — which launched its most powerful satellite yet, JUPITER 3, last month — also reported second-quarter results Tuesday. The company reported net income of $9.1 million and revenue of $453.1 million for the quarter, marking year-over-year declines of 13% and 9%, respectively.
EchoStar subsidiary Hughes saw total broadband subscribers decline to 1.1 million at quarter end, with the company noting increasing bandwidth usage by U.S. subscribers and competitive pressures. The company's new JUPITER 3 satellite is anticipated to bolster Echostar's network capacity, with service slated to begin in the fourth quarter.
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