Sirius, XM OK merger deal
EmptyUPDATED 3:40 p.m. PT Nov. 13, 2007
Shareholders of the two U.S. satellite radio firms on Tuesday overwhelmingly voted in favor of a merger, though their plans still face regulatory scrutiny amid significant objection from traditional radio broadcasters.
Sirius Satellite Radio said more than 96% of its voting shareholders were in favor of the plan to give 4.6 Sirius shares for each XM share and split the combined company 50-50. XM said more than 99.8% of shares voted were in favor.
News of the vote sent shares of each company higher on Tuesday, with Sirius up 6.5% to $3.63 and XM up 9.7% to $15.06.
The U.S. Department of Justice and the FCC must approve the merger, and XM and Sirius executives repeatedly have said that they expect such approval by year's end. Sirius CEO Mel Karmazin said he would sue if the FCC blocked the proposed merger.
The same day shareholders voted their approval, former FCC chairman Reed Hundt wrote in support of the plan, saying that a combined Sirius-XM could inspire "the elephant-like industry" of traditional radio to improve its offerings amid increased competition.
While the National Association of Broadcasters, which represents traditional radio operators, has maintained that allowing XM to merge with Sirius would create a monopoly, Hundt supported the notion that no monopoly would exist because of competition from the Internet, digital music players and other newer technologies.
The merger deal values XM at about $5.1 billion. On Tuesday, XM's market capitalization was $4.7 billion, while Sirius sported a market cap of $5.3 billion.