Billionaire Charlie Ergen Combines Telecom Companies in All-Stock Deal

Billionaire Charlie Ergen has made the decision to merge his two telecom companies, Dish Network Corp. and EchoStar Corp., in an all-stock deal. This announcement has caused the share prices of both companies to soar. Additionally, bond values have experienced a rally as well.

The Wall Street Journal reported on Monday evening that the companies would merge, which was later confirmed by the companies themselves. Under the terms of the merger, EchoStar shareholders will receive 2.85 Dish shares for each share of EchoStar Corporation Class A, Class C, or Class D common stock they hold. Additionally, they will receive 2.85 shares of DISH Network Class B common stock for each share of EchoStar Corporation Class B common stock they own.

This exchange ratio offers a premium of 12.9% compared to the 30-day volume weighted average closing stock prices of both companies on July 5th. This date represents the last full trading day before there was any media speculation regarding a potential transaction.

In a joint statement, the companies emphasized that the transaction will bring together DISH Network's satellite technology, streaming services, and nationwide 5G network with EchoStar's premier satellite communications solutions. They believe that this combination will establish a global leader in both terrestrial and non-terrestrial wireless connectivity. Furthermore, they expect the merger to yield significant cost and revenue synergies, as well as improve free cash flow. Charlie Ergen referred to the merger as a "strategically and financially compelling combination" focused on growth and building a long-term sustainable business.

The deal is slated to conclude by the end of the year.

On Tuesday, Dish Network's stock rose by 8%. However, data-as-a-service company BondCliQ Media Services' chart illustrates that there was predominantly net selling into the rally on that day. Over the past 10 days, the bonds also experienced a higher amount of net selling, according to BondCliQ.