EchoStar spinoff shares soar

Stock ends 1st day with market value of $2.9 billion

David Milstead and Jeff Smith

Thursday, January 3, 2008

A spinoff is designed to unlock value.

And that's exactly what happened on the first day of Douglas County-based EchoStar's spinoff - to the benefit of shareholder and CEO Charlie Ergen's fortunes alike.

Shares of the new EchoStar Holding Co. (trading under the ticker symbol SATS on the Nasdaq) soared 73 percent Wednesday to $32.59 on the first day of trading after being separated from the consumer satellite-TV services company (trading under the symbol DISH on the Nasdaq).

The new company, which holds the technology and satellite-infrastructure assets, ended the day with a market value of about $2.9 billion. That more than compensated for the 5.5 percent drop in DISH shares.

Combined, the two firms had a market cap of about $18.6 billion at Wednesday's close, up from $16.9 billion for DISH on Monday.

EchoStar shareholders got 0.2 shares of SATS for each DISH share they owned, so they clearly benefited from Wednesday's price surge.

SATS held the honor of being the biggest percentage price gainer of the day among all Nasdaq stocks.

The spinoff also boosted the wealth of Ergen's family, which holds almost 240 million DISH shares.

The Ergen family's outright holdings of DISH were worth just over $9 billion Monday. But they had soared to $9.9 billion by the end of Wednesday's trading session, thanks to SATS.

It's unclear, of course, whether the surge will be sustained.

SATS drifted down a few cents in after-market trading, but DISH was up.

The country's second-largest satellite-TV company has registered to bid in the upcoming multibillion-dollar wireless auction being conducted by the Federal Communications Commission.

That development has squelched, at least temporarily, the speculation that AT&T, which also has registered for the auction, might acquire EchoStar. Auction participants are banned from merger discussions.