Sirius & XM to Merge
NEW YORK and WASHINGTON, D.C. – Sirius and XM satellite radio companies have decided to merge, but will continue to operate independently until the transaction is completed and work together to determine the combined company's corporate name and headquarters location prior to closing. The combination creates a nationwide audio entertainment provider with combined 2006 revenues of approximately $1.5 billion based on analysts' consensus estimates. The companies have a combined total of approximately 14 million subscribers. The merger will position the combined company stand up to both existing competition from free over-the-air AM/FM radio, iPods, and mobile phone streaming, and new challenges from the rapid growth of HD Radio, Internet radio and next generation wireless technologies. Benefits of the merger include a wider selection of content for consumers, and improvements to products such as real-time traffic and weather, and rear-seat video; the development and introduction of a wider range of lower cost multi-functional devices through efficiencies in chip set and radio design and procurement; and better management of costs through sales and marketing and subscriber acquisition efficiencies, satellite fleet synergies, combined R&D and other benefits from economies of scale. XM and SIRIUS shareholders will each own approximately 50 percent of the combined company. Sirius chief executive officer Mel Karmazin will become CEO of the combined company, and XM chairman Gary Parsons will become chairman of the combined company. XM’s 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 new company's board of directors will consist of 12 directors, including Messrs. Karmazin and Parsons, four independent members designated by each company, as well as one representative from each of General Motors and American Honda. 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.