Charlie Ergen, the chairman and co-founder of Dish Network (NASDAQ:DISH) and EchoStar (NASDAQ:SATS), plans to merge both companies, the Wall Street Journal reported. The merger, which could be announced as soon as today, could help create a wireless network giant that could compete with industry leaders like Verizon Communications (NYSE:VZ) and AT&T (NYSE:T), the report highlighted.
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Earlier, in 2008, Ergen completed the spinoff of Dish Networks from EchoStar’s equipment and satellite communication business.
Coming back to the merger, the terms of the deal are not known. However, the offer price could be lower than EchoStar’s closing price on August 7. Notably, EchoStar stock closed over 21% higher on Monday after Raymond James analyst Ric Prentiss upgraded his recommendation to Strong Buy from Outperform (See the image below).
The analyst sees SATS as well-positioned in the U.S. Satellite industry and expects it to benefit from significant capacity expansion, a strong balance sheet, and a low valuation.
DISH And SATS Merger May Create a Wireless Network Powerhouse
Currently, Dish Networks operates through two primary business segments – Pay-TV and Wireless. Its Wireless business has two divisions: Retail Wireless (offering prepaid and postpaid retail wireless services through the Boost Mobile, Boost Infinite, and Gen Mobile brands) and 5G Network Deployment.
Instead, EchoStar is a provider of satellite operations. The company, through its wholly-owned subsidiary, Hughes, offers satellite broadband services. In addition, it provides satellite services through its EchoStar Satellite Services segment.
The combination of these businesses should enable Ergen to expand its wireless network business, add financial flexibility, and win investors’ confidence.
Is DISH a Good Stock to Buy Now?
It is unclear how the merger will turn out for Dish Network’s shareholders. Meanwhile, DISH stock has four Buy, five Hold, and one Sell recommendations from Wall Street analysts, reflecting a Moderate Buy consensus rating.
Furthermore, analysts’ average price target of $16.11 implies 110.86% upside potential from current levels.
