It's Official: Sirius, XM Merge In $13 Billion Deal
February 19, 2007 at 12:00 PM (PT)
As rumored earlier today on ALL ACCESS, SIRIUS SATELLITE RADIO and XM SATELLITE RADIO today officially announced that they have entered into a definitive agreement under which the companies will be combined in a tax-free, all-stock merger of equals with a combined enterprise value of approximately $13 billion, which includes net debt of approximately $1.6 billion. Under the terms of the agreement, XM shareholders will receive a fixed exchange ratio of 4.6 shares of SIRIUS common stock for each share of XM they own. XM and SIRIUS shareholders will each own approximately 50% of the combined company.
This combination is the next logical step in the evolution of audio entertainment.
As expected, SIRIUS CEO MEL KARMAZIN will become CEO of the combined company, while XM Chairman GARY PARSONS will be Chairman of the merged entity. The new company's board of directors will consist of 12 directors, including KARMAZIN and PARSONS, four independent members designated by each company, as well as one representative from each of GENERAL MOTORS and AMERICAN HONDA.
XM CEO HUGH PANERO will continue in his current role until the anticipated close of the merger. Further management appointments will be announced prior to closing. The companies will continue to operate independently until the transaction is completed and will work together to determine the combined company's corporate name and headquarters location prior to closing.
"We are excited for the many opportunities that an XM and SIRIUS combination will provide consumers," PARSONS and PANERO said in a joint statement. "The combined company will be better positioned to compete effectively with the continually expanding array of entertainment alternatives that consumers have embraced since the FCC first granted our satellite radio licenses a decade ago."
KARMAZIN said, "This combination is the next logical step in the evolution of audio entertainment. Together, our best-in-class management team and programming content will create unprecedented choice for consumers, while creating long-term value for shareholders of both companies. The combined company will be positioned to capitalize on SIRIUS and XM's complementary distribution and licensing agreements to enhance availability of satellite radios, offer expanded content to subscribers, drive increased advertising revenue and reduce expenses. Each of our companies has a strong commitment to providing listeners the broadest range of music, news, sports and entertainment and the best customer service possible. We look forward to sharing the benefits of the exciting new growth opportunities this combination will provide with all of our stakeholders."
A press release on the merger points out that the combined company intends to offer "greater programming and content choices ... including offering consumers the ability to pick and choose the channels and content they want on a more a la carte basis."
The transaction is subject to approval by both companies' shareholders, the satisfaction of customary closing conditions and regulatory review and approvals, including antitrust agencies and the FCC. Pending regulatory approval, the companies expect the transaction to be completed by the end of 2007.