DISH Network (NASDAQ:DISH) shares clawed back their initial premarket losses Tuesday after reporting earnings. The report helped the stock gain after it initially fell following the news it will merge with EchoStar Corp (NASDAQ:SATS).
Ahead of the release of the results, the companies announced that they had struck a deal for an all-stock merger, with EchoStar shareholders receiving 2.85 shares of DISH for each SATS share. Following the announcement, DISH shares fell almost 2% in premarket trading.
Once the merger is completed, DISH shareholders will own about 69%, and EchoStar shareholders will own approximately 31% of the stock of the combined company.
"This is a strategically and financially compelling combination that is all about growth and building a long-term sustainable business," said Charles Ergen, chairman of the Board of both DISH Network and EchoStar.
"The transaction is expected to generate significant cost and revenue synergies, and the strong asset portfolio of the combined company paired with its enhanced free cash flow generation capability and strengthened capital structure are expected to drive long-term value creation for our shareholders and other stakeholders."
Despite the initial share price decline following the merger announcement, American TV provider DISH topped earnings expectations in the second quarter, sending its shares over 1% higher.
The company posted earnings of $0.31 per share, topping the consensus estimate of $0.30 per share. Revenue came in at $3.91 billion, down from the $4.21B in the same period last year, but in line with consensus expectations.
DISH said net pay-TV subscribers decreased by approximately 294,000 in the second quarter, while retail wireless net subscribers fell by around 188,000.