Monday, Feb. 19, 2007 — XM Satellite Radio and Sirius Satellite announced this afternoon that they would be merging. The value of the combined company will be approximately $13 billion dollars. The deal is expected to be completed by the end of this year, although there is some question about whether federal regulators will allow the merger to take place.
Stock-watchers have been hearing rumors for a while about an impending merger, but it wasn’t until today that it was officially announced.
Because XM and Sirius are the only satellite radio broadcasters in the United States, consumers who want to subscribe to satellite radio will have only one choice of provider after the merger is complete. The companies say, however, that consumers will actually have a greater choice of content, and will be also be able to choose the stations they want to subscribe to “on a more a la carte basis.”
Mel Karmazin, currently the CEO of Sirius, will run the new company. He will become the CEO, and Gary Parsons, currently Chairman of XM, will become Chairman of the new company.
Both companies were spending heavily to attract new subscribers, and both companies were losing money.
Shareholders of XM (Nasdaq symbol XMSR) will receive 4.6 shares of Sirius stock (Nasdaq symbol SIRI) for each share of XM that they own. XM and Sirius shareholders will each own about half of the combined company.
The stock markets were closed for President’s Day today, so calculations of share value will be based on Friday’s closing prices.
The deal still has to be approved by federal regulators. The FCC actually has a rule that prohibits one satellite radio provider from buying another, but the companies apparently hope that the rule will be waived. The companies will also have to convince the Department of Justice that the merger will not violate antitrust rules. Financial analysts disagree about whether or not the companies have a good chance of getting the approval they need.
For more information, you can listen to a conference call and webcast put on jointly by both companies on Tuesday morning, Feb. 20, at 8:30 am Eastern time. To listen to the conference call, dial 800-573-4840 within the U.S. and 617-224-4326 outside the U.S., and use passcode 29490052. The webcast will be broadcast at www.sirius.com and www.xmradio.com and on the radio on channel 122 on Sirius and Channel 200 on XM. The webcast will also be archived on the sirius and xmradio websites, for those unable to listen to it live.
Sirius Radio to merge with XM in $13 billion deal, Feb. 19, 2007, Reuters
SIRIUS and XM to Combine in $13 Billion Merger of Equals, Feb. 19, 2007, Press release from Sirius Satellite Radio and XM Satellite Radio, PRNewswire
Sirius to Acquire Larger Rival XM for $4.57 Billion (Update1), by Christopher Stern, Feb. 19, 2007, Bloomberg
XM and Sirius Satellite Radio to merge, by Seth Sutel, Feb. 19, 2007, Associated Press
XMSR and SIRI pages on Yahoo Finance and on Google Finance