A more than 20 percent decline in El Segundo-based Hughes Electronics Corp.’s share price in the wake of last month’s terrorist attacks has thrown its pending sale into uncertainty.
Hughes’ shares closed at $12.75 on Sept. 27, down from $16.18 on Sept. 10, the day prior to the attacks. General Motors Corp. owns 30 percent of Hughes’ tracking stock, and is negotiating to sell it to either News Corp. or EchoStar Communications Corp.
Hughes’ stock decline has trimmed the amount of cash that GM could get by at least $1 billion, said Scott Keller, president of DealAnalytics.com. A person close to the negotiations said the deal GM has been working on with News Corp. for more than a year must be recast. “There are ways around (GM’s cash requirements),” the source said.
News Corp. plans to combine Hughes’ DirecTV operation with its 36 percent stake in European satellite broadcaster BSkyB, its Asian satellite network, STAR, and its one-third stake in Sky Latin America to form a global satellite network. Cash for the deal would come from Microsoft Corp. and Liberty Media Corp.
But with stock prices cratering, the valuations assigned to the assets of Hughes and News Corp. have been upended. Some media reports suggest that GM will simply hold off on a sale until capital markets stabilize.
Other reports suggest that GM might be willing to accept stock instead of cash, and that News Corp. is aggressively cutting back spending in the hope that stronger financials will buoy its stock price. News Corp.’s stock value fell 23.3 percent between Sept. 10 and Sept. 27, as the Australian media giant faces the prospect of global recession. EchoStar’s stock fell 11.3 percent during that period.
GM continues talks with News Corp. and Echostar, which launched its unsolicited bid in August. “Beyond that we can’t really say much,” said GM spokesman Jerry Dubrowski.
News Corp. spokesman Andrew Butcher acknowledged that negotiations have slowed since Sept. 11. “We’re gradually getting back under an even keel,” he said, declining further comment.
EchoStar spokeswoman Judianne Atencio declined comment.
