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Summary:

Updated : The official release is out, confirming the deal, pending regulatory approval. Mel Karmazin, the CEO of Sirius, would become CEO o…

imageUpdated : The official release is out, confirming the deal, pending regulatory approval. Mel Karmazin, the CEO of Sirius, would become CEO of the new company while Gary Parsons, the chairman of XM, would remain in that role.
Details:
– 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.
– 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 percent of the combined company.
– 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. Hugh Panero, CEO of XM, will continue in his current role until the anticipated close of the merger.
– The two will have combined 2006 revenues of approximately $1.5 billion based on analysts’ consensus estimates. As of now, the companies have approximately 14 million combined subscribers.
– Analysts have published estimates of the present value of cost synergies ranging from $3 billion to $7 billion.
– The companies expect the transaction to be completed by the end of 2007.
– The companies will hold a joint conference call and webcast on tomorrow at 8:30 AM ET to discuss this announcement.
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Original post: So says NYP, citing sources: “The two sides were locked in negotiations over the weekend trying to hammer out a final agreement with an eye toward going public with the merger today in Washington, D.C.”, the story says.
The transaction is expected to be structured as a merger of equals, but given Sirius‘ higher enterprise value, shareholders in the Mel Karmazin-led firm will likely come away with a larger percentage of a combined company, it says.
Updated: WSJ is reporting the same as well now. “The two are nearing an agreement but have yet to ratify a definitive contract”. If completed, a deal would create a single satellite-based giant, a fact which could prove a difficult issue for antitrust and communications regulators. Already FCC Kevin Martin has signaled some resistance to a coupling of the two services, which feature rival menus of sports, music, and talk-radio programming.
ABCNews: Says it has confirmed it. The plan calls for Sirius CEO Mel Karamzin to run the new company.
Related:
– <a href="http://www.paidcontent.org/entry/karmazin-wants-merger-with-xm-says-regulatory-issues-wont-happen-now/&quot; title="Karmazin Wants Merger With XM; Says Regulatory Issues Won

  1. Oh my god. Mel Karmazin is a big winner here. Sirius stock will baloon, while XM shares will take a hit. The bottom line: The Howard Stern gamble was well worth it.

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