EchoStar Makes New Bid For Hughes

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Littleton, Col. - After staying mostly mum on his plans to acquire Hughes Electronics including chief rival DirecTV during the just concluded Satellite Broadcasting & Communications Association show, EchoStar chairman Charlie Ergen upped the ante over the weekend.

EchoStar sent a letter with a new offer to the board of directors for General Motors, which controls DirecTV parent Hughes Electronics. Under EchoStar's offer, Hughes (GMH) shareholders would receive .75 shares of DISH stock for each GMH share. That would represent $22.83 per GMH share using the $30.44 per share closing price of EchoStar stock on Aug. 3, kicking the Hughes' value up to $32.2 billion, according to the company.

Ergen's deal would also include the assumption of $1.9 billion of Hughes debt.

In the letter to the GM board EchoStar said, 'The combined company's unrivaled satellite network and subscriber base would enable it to achieve greater profitability than either company would be able to achieve on its own.'

The offer came after DirecTV executives Eddy Hartenstein (chairman) and Roxanne Austin (president) spent most of the SBCA show explaining that a final deal that would turn Hughes over to News Corp. appeared to be 'rounding the corner' to completion. News Corp. is trying to acquire Hughes in order to add DirecTV to its SkyGlobal spin-off that would command a worldwide satellite television network.

Industry analysts said the timing of latest EchoStar offer appeared intentional, because it would likely further delay negotiations between Hughes and News Corp. and possibly drive the negotiating price higher if News Corp. does prevail, as many believe it will.

Still, EchoStar's DISH Network has made considerable market share gains on DirecTV as GM has continued to negotiate the sale of Hughes. Further distractions would likely continue to play in EchoStar's favor.


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