Hughes-Echostar Merger Scuttled10 Dec, 2002 By: Hive News
EchoStar Communications Corp. and General Motors subsidiary Hughes Electronics Corp. have called off their merger proposal, executives announced today.
Under terms of the settlement, EchoStar has paid Hughes $600 million in cash, and Hughes will retain its 81 percent ownership position in PanAmSat.
"We continue to believe that the proposed merger would have been a victory for consumers nationwide and for our shareholders. We worked hard on it to get the required regulatory approval and are disappointed that we were not able to complete the merger," said Hughes president and CEO Jack A. Shaw. "However, since the merger couldn't be completed, we concluded that this settlement is the best alternative for Hughes and places us in the best position to move ahead with our business."
The companies blamed legal actions by the federal Department of Justice, 23 states, the District of Columbia and Puerto Rico to block the merger, as well as the Federal Communications Commission's decision to send the merger application to a hearing, for scuttling the deal that would have created the world's larges satellite entertainment provider.
"We are appreciative of all the support we received and the opportunity to present the merger proposal to regulators. Obviously, we are disappointed in the final outcome,” said EchoStar chairman and CEO Charles Ergen. “However, EchoStar will continue to seek alternative, innovative ways to provide competition to the rapidly consolidating cable industry and to provide more choices for all consumers."
As a result of the merger termination, EchoStar will take an approximate $700 million write off in the fourth quarter for the merger breakup fee and other related merger expenses.