© Reuters. FILE PHOTO: A Dish Network receiver hangs on a house in Somerville, Massachusetts, U.S., February 21, 2017. REUTERS/Brian Snyder/File Photo
(Reuters) – Pay-TV provider Dish Network (NASDAQ:) plans to merge in an all-stock deal with satellite communications vendor EchoStar, the companies controlled by billionaire Charles Ergen said on Tuesday.
Ergen, who co-founded Dish, owns more than half of its outstanding shares and owns nearly 60% of EchoStar, according to regulatory filings.
Shares of Dish were up marginally while those of EchoStar were down 6.6% after premarket trading resumed.
The deal combines Dish’s Pay-TV business and its 5G wireless network with EchoStar’s satellite communications solutions.
EchoStar has a bank of satellites that serve the U.S. government, media organizations and Hughes Network home customers.
Dish has focused on expanding its cellular wireless offerings, though it faces tough competition from larger carriers including AT&T (NYSE:) and Verizon Communications (NYSE:).
Under the terms of the deal, EchoStar stockholders will receive 2.85 shares of Dish Network’s Class A common stock, with the exchange ratio representing a 12.9% premium to EchoStar’s close on July 6 when reports of a merger first surfaced.
EchoStar’s CEO Hamid Akhavan will lead the combined company upon the completion of the deal, which is expected by the end of the year. Ergen will serve as executive chairman.
As of Monday’s close, the market value of Dish stood at $4.07 billion while that of EchoStar was $1.97 billion.
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