Though this shouldn’t have come as a surprise to Valuentum members, Bloomberg has reported that Dish Network’s (DISH) CEO Charlie Ergen has approached DirecTV’s (DTV) CEO Mike White about a merger. We have held DirecTV in the Best Ideas portfolio for some time, and here’s what we wrote just over a month ago on February 20:
Competition continues to heat up, and Comcast’s (CMCSA) decision to merge with Time Warner Cable (TWC) creates a larger, formidable foe (see details here). However, it also increases the likelihood of a long-anticipated DirecTV-Dish Network tie-up. Though we acknowledge the risks related to a fast-changing industry landscape, our primary thesis on DirecTV is valuation-based. At the time of this writing, we think shares are worth roughly $80 each, implying further upside. DirecTV continues to be a holding in the Best Ideas portfolio.
We think we nailed this one for members. Bloomberg went on to say:
Ergen made the approach in response to Comcast Corp.’s $45 billion acquisition of Time Warner Cable Inc. in mid-February, one of the people said, asking not to be identified discussing confidential information. White is reluctant to push forward with formal talks out of concern regulators may block the deal because the two companies directly compete with each other, another person said.
Although White is hesitant to pursue a deal, he hasn’t ruled it out entirely, one person said. The talks are being conducted at a senior level with no official process yet under way, several people said.
The news is still developing, but we’re very pleased for members. DirecTV’s shares are trading at about $77 per share following the news, up from about $55 per share when they were added to the Best Ideas portfolio. Congrats to those members following the transaction alerts!