News for 'XMSR' - (DJ Satellite Radio Rivals XM, Sirius Agree To Merge)
NEW YORK (AP)--XM Satellite Radio Holdings Inc. (XMSR) and Sirius
Satellite Radio Inc. (SIRI) have agreed to merge, the two companies
said
Monday.
The deal would consolidate the only two companies in the emerging
business of subscription-only satellite radio, and is sure to face
tough
scrutiny from federal regulators. Investors and analysts have been
speculating about a deal for months.
The two companies said in a statement that Mel Karmazin, the CEO of
Sirius, would become chief executive of the new company while Gary
Parsons, the chairman of XM, would remain in that role. XM's CEO Hugh
Panero will remain to oversee closing the of the deal, they said.
The deal would face significant regulatory hurdles in Washington,
including a Federal Communications Commission rule that clearly states
that one satellite radio provider cannot buy the other one. However,
that
rule could be waived.
A combination would also have to meet antitrust approval from the
Department of Justice. The companies are expected to argue that they
compete not only with each other but also with a growing base of
digital
audio sources such as iPods, mobile phones, and non-satellite digital
radio.
XM and Sirius have both posted significant financial losses as they
built up their programming lineups and recruited subscribers. Both
stocks
declined more than 40% last year on concerns about their continued
growth
in subscribers and softness in the retail market, but investors have
held
out hopes that a merger could bring costs down significantly.
Shareholders of XM and Sirius would each own approximately 50% of the
combined company. XM shareholders would receive 4.6 shares of Sirius
stock
for each share of XM they own.
That would value XM shares at $17.02 each, based on Friday's closing
prices, representing a premium of 22% from XM's closing value of $13.98
Friday. Markets were closed Monday for the Presidents Day holiday.
The companies didn't say what the new company would be called, though
they described it as a merger of equals. The new company's board will
have
12 members, including Parsons, Karmazin, four independent directors
named
by each company, and one representative each from General Motors Corp.
(GM) and Honda Motor Co. (HMC).
News of a possible merger was reported earlier Monday by the New York
Post.
On Friday, a Bear Stearns analyst said in a research note that a
merger
would have a good chance of overcoming regulatory obstacles.
Other analysts remain less sure. Sanford C. Bernstein analyst Craig
Moffett said he gives the deal a "50-50" chance of passing regulatory
muster.
Moffett said the deal could have a particularly tough time getting
through the FCC, and is likely to opposed by the National Association
of
Broadcasters, a lobbying group that includes radio broadcasters.
Moffett
said it was "anyone's guess" as to whether the FCC would change its
rule
barring a consolidation of the two satellite radio companies.
(END) Dow Jones Newswires February 19, 2007 16:07 ET (21:07 GMT)
Copyright (c) 2007 Dow Jones & Company, Inc.- - 04 07 PM EST
02-19-07Source: DJ Broad Tape |
