I am opposed to the merger on the basis that XM shareholders didn't get value for essentially bailing Sirius out of its mess. But the article definitely gets a couple things right:
Mr. Parsons argued that his company had more subscribers and more revenue, but that its investors, mostly institutions like Axa and Legg Mason, didn’t value the company highly enough. Empirically, Mr. Parsons’ argument is right, despite the wisdom of crowds: “It never made any sense analytically that XM was worth less than Sirius,” said Craig E. Moffett, an analyst at Sanford C. Bernstein. “If anything, I was surprised that the premium was as small as it was.”
Shares of Sirius, meanwhile, which just a year and a half ago were worth less than XM’s, had leaped, partly on the back of high-profile deals like the one it signed with Howard Stern. Those deals attracted thousands of retail investors, not considered the smart money, like moths to a flame into Sirius stock. |
