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XM and Sirius plan $13-billion (U.S.) merger
Associated Press
NEW YORK — Satellite radio rivals XM and Sirius said Monday they have reached an agreement to merge.
Speculation about a potential merger between the two companies has persisted for months, and analysts and company executives say such a deal could have significant cost savings. However, many remain skeptical that a deal would be able to pass regulatory scrutiny.
A clause in the U.S. Federal Communications Commission ruling granting licences to the satellite radio operators says that one company cannot own the other one, but the FCC would have the power to change the rule if it chose to. Any deal would also have to pass an antitrust review at the Department of Justice.
It wasn't immediately clear how the merger would affect the two companies' respective partners in Canada, which got regulatory approval in 2005 after making commitments to meet Canadian standards.
Sirius Canada Inc. is owned by the government-owned CBC, privately held Standard Radio and U.S.-based Sirius Satellite Radio.
XM Canada is affiliated with XM Satellite Radio Holdings Inc. and Canadian Satellite Radio Holdings Inc., a publicly traded company based in Toronto. Following the merger announcement, Canadian Satellite Radio Holdings shares surged 25 per cent, gaining $1.66 to trade at $8.30 per unit.
The shares of both U.S. companies tumbled more than 40 per cent last year on concerns about whether the rapid growth both companies had seen would continue. Both stocks have gained support in recent months from speculation that they would attempt to merge.
XM's stock rose again Friday after an analyst said in a research note that a merger would have a good chance of passing regulatory hurdles.
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.
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