Sirius Canada and XM Canada to Join Forces

Just as their U.S. parents did earlier, Canada's twin satellite radio companies are to merge.

The deal between Sirius Canada and XM Canada’s Canadian Satellite Radio Holdings has been long anticipated since their American counterparts, Sirius Satellite Radio and XM Satellite Radio Holdings, from whom both secure the bulk of their programming, merged in 2008.

Regulatory issues needed to be ironed out before the combination of the Canadian licensees of U.S.-based Sirius and XM services could take place, a move that will produce one satellite radio operator valued at $520 million, including long-term debt of around $130 million.

Under the terms of the agreement, Sirius Canada shareholders will receive treasury shares of Canadian Satellite Radio Holdings amounting to a 58% interest in the newly-merged entity.

The Canadian Broadcasting Corp. will have a 15% equity interest in the new combination, based on its prior stake in Canadian Satellite Radio Holdings. John Bitove Jr., who launched Sirius Canada in 2005, will hold a 22.7% equity stake in the new combination, while Sirius XM Radio Inc., the American owners of the Canadian radio brands, will assume a 37.1% equity stake.

The combined company will have around 1.7 million Canadian subscribers and, on a trailing 12 months basis, pro forma revenues at around $200 million, and pro forma EBITDA of around $7 million.