Echostar to buy Hughes Communications

EchoStar Corp. plans to buy broadband satellite network provider Hughes Communications Inc. in a deal worth around $2 billion including the assumption of debt. There are any number of ways to spin the value of the deal. One is a "TV Everywhere" capability for Dish Network customers. EchoStar already owns Sling, so the additional capacity EchoStar is gaining might be coupled with Sling features to create a sort of instant "TV Everywhere" service.

The other angle is revenue diversification and growth. Ask a cable executive where the strongest growth now is coming from, and you will be told it is business services (voice and data) sold to business customers. Hughes will bring a multinational enterprise services business, as well as a smaller play for small and mid-sized business customers. Hughes recently has introduced a business-grade voice service for enterprise customers, for example, allowing it to sell a voice and data package.

EchoStar agreed to acquire Hughes for a price of $60.70 per share, representing a two percent discount to Friday’s closing price, but a premium of 31 percent over the January 19, 2011, price of $46.43 when news first broke that Hughes was up for sale.

The transaction values Hughes at about 6.8x times 2011 adjusted EBITDA forecast of $292 million,

which represents a fair multiple for the company, based on the company's historic multiple range of 3 times to four times adjusted EBITDA, but well below the eight times to 10 times multiple some had assumed Hughes might fetch.

Echostar to buy Hughes Communications for $2 billion | Washington Business Journal