EchoStar Acquires Mexican Satellite Operator Satmex In $374 Million Deal

Looking to expand its footprint into Latin America and beyond, EchoStar (NSDQ: SATS) is acquiring a stake in Mexican satellite company Satmex in what will ultimately be a $374 million cash deal. EchoStar’s existing Mexican partner, MVS Comunicaciones, the operator of the Dish Mexico satellite TV service, is assisting the Englewood, Colo.-based company through a joint venture. Together, EchoStar and MVS Comunicaciones will acquire all of the outstanding stock of Satmex.
The deal initially calls for EchoStar and MVS to put up $267 million in cash. At the deal’s closing, which is expected by Q3 2010, the companies have pledged up to $107 million in cash on top of that initial amount. When it’s all completed, Satmex says it will buy back all of its outstanding Senior Secured Notes for cash. The companies’ announcement did contain some caveats. In particular, the approval of Satmex’s bondholders, some of whom have indicated opposition to the EchoStar offer, is required.
Satmex was founded in the mid-1980s as a government-owned entity. It went private in 1995. While Dean Olmstead, president of EchoStar Satellite Service, said that the deal is part of a plan to expand the satellite provider’s reach into South America, Satmex CEO Patricio Northland also sees the opportunity to cast its net beyond Mexico.
EchoStar, which spun off its Dish Network unit into a separate company in December 2007, hasn’t done many major acquisitions. Perhaps its most notable purchase before Satmex was the $380 million purchase of Sling Media in Sept. 2007. In addition to international expansion, EchoStar and Sling, along with the Dish Network, have been promoting a set of products similar to the cable industry concept of “TV Everywhere,” though the efforts are a year behind what was originally planned. Release