Dish, EchoStar to Merge. It's a Challenge to AT&T and Verizon.

Billionaire Charlie Ergen is planning to combine pay-TV provider
Dish
Network and satellite-communications company
EchoStar.

It’s a deal that would allow the telecoms mogul to consolidate his holdings but it might not be to the liking of all shareholders.

Ergen controls both companies and recombining them–EchoStar was spun out of Dish in 2008–could help his challenge to
AT&T
(T) and
Verizon
(VZ) in the wireless sector. A combined company could find it easier to raise the capital for building out a national 5G wireless network.

EchoStar
(ticker: SATS) investor will receive 2.85 shares of Dish (DISH) for each of their EchoStar shares, the companies said Tuesday as they announced an agreement to combine.

EchoStar shares were down 1.2% in premarket trading on Tuesday at $23.22, while Dish shares were down 0.8% at $7.58. EchoStar has a market capitalization of $1.62 billion while Dish is valued at $4.04 billion.

However, the merger could be contentious among minority shareholders considering the divergence in the two companies’ recent fortunes.

Dish shares were down 46% this year so far as of Monday’s close, as it has struggled to stem subscriber losses and has a heavy debt load.

By contrast, EchoStar was up 41% this year so far as of Monday’s close. EchoStar had $1.7 billion in cash on its balance sheet at the end of March 1 and is expected to benefit from the recent launch of its Jupiter 3 communications satellite.

Write to Adam Clark at [email protected]

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