Rupert returns

13 December 2002 By Paul Raynes

Rupert returns

13 December 2002 By Paul Raynes

General Motors was unwise to gamble on selling DirecTV to Echostar. Now the regulators have squashed that, it is back to square minus one. News Corp, last year’s loser, now has a chance to strike a keener deal. GM would like to hang cool for a while, but can’t really afford to.

This content is for Subscribers only

Context News

With the planned merger between Hughes and Echostar called off, Rupert Murdoch's News Corporation is again interested in buying Hughes for the sake of its DirecTV satellite broadcasting subsidiary. The merger was agreed in October 2001, beating a bid for Hughes from News Corp. But the deal, which would have created an entity with a 91% market share, failed to receive clearance from US antitrust regulators. General Motors, Hughes' parent, and Echostar agreed to scratch it, in return for Echostar paying a $600m break fee.

Hughes is 100% owned by General Motors, which issues General Motors H shares to track its earnings. 70% of the authorised GMH stock is publicly traded, with General Motors owning the remaining economic interest in Hughes. The Echostar deal, which was struck when the GMH stock was priced at around $15, valued Hughes at $18.44 a share, implying a total market capitalisation of $26bn. Hughes' current market capitalisation is about $15bn.

Email a friend

Please complete the form below.

Required fields *