Provides Consumers with Enhanced Content, Greater Choices and Accelerated Technological Innovation Enables Satellite Radio to Better Compete in Rapidly Evolving Audio Entertainment Industry
Extraordinary Value Creation for Shareholders
Mel Karmazin to Serve as Chief Executive Officer and Gary Parsons to Serve as Chairman of Combined Company
WASHINGTON and NEW YORK, Feb. 19 LAWFUEL – US Business + Law — XM Satellite Radio (Nasdaq: XMSR) and SIRIUS Satellite Radio (Nasdaq: SIRI) today announced that they have entered into a definitive agreement, under which the companies will be combined in 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.
Under the terms of the agreement, 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.
Mel Karmazin, currently Chief Executive Officer of SIRIUS, will become Chief Executive Officer of the combined company and Gary Parsons, currently Chairman of XM, will become Chairman of the combined company. 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. Hugh Panero, the Chief Executive Officer of XM, will continue in his current role until the anticipated close of the merger.
The combined company will benefit from a highly experienced management team from both companies with extensive industry knowledge in radio, media,
consumer electronics, OEM engineering and technology. Further management
appointments will be announced prior to closing. The companies will
continue to operate independently until the transaction is completed and
will 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. Today the companies have approximately 14 million combined subscribers. Together, SIRIUS and XM will create a stronger platform for future innovation within the audio entertainment industry and will provide significant benefits to all constituencies, including:
* Greater Programming and Content Choices — The combined company is
committed to consumer choice, including offering consumers the ability
to pick and choose the channels and content they want on a more a la
carte basis. The combined company will also provide consumers with a
broader selection of content, including a wide range of commercial-free
music channels, exclusive and non-exclusive sports coverage, news,
talk, and entertainment programming. Together, XM and SIRIUS will be
able to improve on products such as real-time traffic and rear-seat
video and introduce new ones such as advanced data services including
enhanced traffic, weather and infotainment offerings.
* Accelerated Technological Innovation — The merger will enable the
combined company to develop and introduce a wider range of lower cost,
easy-to-use, and multi-functional devices through efficiencies in chip
set and radio design and procurement. Such innovation is essential to
remaining competitive in the consumer electronics-driven world of audio
* Benefits to OEM and Retail Partners — The combined company will offer
automakers and retailers the opportunity to provide a broader content
offering to their customers. Consumer electronics retailers, including
Best Buy, Circuit City, RadioShack, Wal-Mart and others, will benefit
from enhanced product offerings that should allow satellite radio to
compete more effectively.
* Enhanced Financial Performance — This transaction will enhance the
long-term financial success of satellite radio by allowing the combined
company to better manage its costs through sales and marketing and
subscriber acquisition efficiencies, satellite fleet synergies, combined
R&D and other benefits from economies of scale. Wall Street equity
analysts have published estimates of the present value of cost synergies
ranging from $3 billion to $7 billion.
* More Competitive Audio Entertainment Provider — The combination of an
enhanced programming lineup with improved technology, distribution and
financials will better position satellite radio to compete for
consumers’ attention and entertainment dollars against a host of
products and services in the highly competitive and rapidly evolving
audio entertainment marketplace. In addition to existing competition
from free “over-the-air” AM and FM radio as well as iPods and mobile
phone streaming, satellite radio will face new challenges from the rapid
growth of HD Radio, Internet radio and next generation wireless
“We are excited for the many opportunities that an XM and SIRIUS
combination will provide consumers,” said Gary Parsons, Chairman of XM
Satellite Radio and Hugh Panero, CEO of XM Satellite Radio, in a joint
statement. “The combined company will be better positioned to compete
effectively with the continually expanding array of entertainment
alternatives that consumers have embraced since the Federal Communications Commission (FCC) first granted our satellite radio licenses a decade ago.”
“This combination is the next logical step in the evolution of audio
entertainment,” said Mel Karmazin, CEO of SIRIUS Satellite Radio.
“Together, our best-in-class management team and programming content will
create unprecedented choice for consumers, while creating long-term value
for shareholders of both companies. The combined company will be positioned to capitalize on SIRIUS and XM’s complementary distribution and licensing agreements to enhance availability of satellite radios, offer expanded content to subscribers, drive increased advertising revenue and reduce expenses.
Each of our companies has a strong commitment to providing
listeners the broadest range of music, news, sports and entertainment and
the best customer service possible. We look forward to sharing the benefits
of the exciting new growth opportunities this combination will provide with all of our stakeholders.”
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.
SIRIUS’s financial advisor on the transaction is Morgan Stanley and
Simpson Thacher & Bartlett LLP and Wiley Rein LLP are acting as legal
counsel. XM’s financial advisor on the transaction is J.P. Morgan
Securities Inc. and Skadden Arps, Slate, Meagher & Flom LLP; Jones Day; and Latham & Watkins LLP are acting as legal counsel.
Conference Call and Webcast Information
The companies will hold a joint conference call and webcast on Tuesday,
February 20, 2007 at 8:30 AM ET to discuss this announcement. The
conference call can be monitored by dialing 800-573-4840 within the U.S.
and 617-224-4326 for all other locations, passcode 29490052. The webcast
can be accessed at http://www.sirius.com and http://www.xmradio.com as well as on their satellite radio services by tuning to SIRIUS channel 122 and XM channel 200. The webcast will be archived at http://www.sirius.com and http://www.xmradio.com.
SIRIUS, “The Best Radio on Radio,” delivers more than 130 channels of
the best programming in all of radio. SIRIUS is the original and only home
of 100% commercial free music channels in satellite radio, offering 69
music channels. SIRIUS also delivers 65 channels of sports, news, talk,
entertainment, traffic, weather and data. SIRIUS is the Official Satellite
Radio Partner of the NFL, NASCAR, NBA and NHL, and broadcasts live
play-by-play games of the NFL, NBA and NHL, as well as live NASCAR races.
All SIRIUS programming is available for a monthly subscription fee of only $12.95.
SIRIUS Internet Radio (SIR) is a CD-quality, Internet-only version of
the SIRIUS radio service, without the use of a radio, for the monthly
subscription fee of $12.95. SIR delivers more than 75 channels of talk,
entertainment, sports, and 100% commercial free music.
SIRIUS products for the car, truck, home, RV and boat are available in more than 25,000 retail locations, including Best Buy, Circuit City,
Crutchfield, Costco, Target, Wal-Mart, Sam’s Club, RadioShack and at
SIRIUS radios are offered in vehicles from Audi, Bentley, BMW,
Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep(R), Land Rover, Lexus,
Lincoln, Mercury, Maybach, Mazda, Mercedes-Benz, MINI, Mitsubishi, Nissan, Rolls Royce, Scion, Toyota, Volkswagen, and Volvo. Hertz also offers SIRIUS in its rental cars at major locations around the country.
Click on http://www.sirius.com to listen to SIRIUS live, or to purchase a SIRIUS radio and subscription.
XM (Nasdaq: XMSR) is America’s number one satellite radio company with
more than 7.6 million subscribers. Broadcasting live daily from studios in
Washington, DC, New York City, Chicago, the Country Music Hall of Fame in
Nashville, Toronto and Montreal, XM’s 2007 lineup includes more than 170
digital channels of choice from coast to coast: commercial-free music,
premier sports, news, talk radio, comedy, children’s and entertainment
programming; and the most advanced traffic and weather information.
XM, the leader in satellite-delivered entertainment and data services
for the automobile market through partnerships with General Motors, Honda,
Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota is available in 140
different vehicle models for 2007. XM’s industry-leading products are
available at consumer electronics retailers nationwide. For more
information about XM hardware, programming and partnerships, please visit
Forward Looking Statements
This press release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, statements about the benefits
of the business combination transaction involving Sirius Satellite Radio
Inc. and XM Satellite Radio Holdings Inc., including potential synergies
and cost savings and the timing thereof, future financial and operating
results, the combined company’s plans, objectives, expectations and
intentions with respect to future operations, products and services; and
other statements identified by words such as “anticipate,” “believe,”
“plan,” “estimate,” “expect,” “intend,” “will,” “should,” “may,” or words
of similar meaning. Such forward- looking statements are based upon the
current beliefs and expectations of SIRIUS’ and XM’s management and are
inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are difficult to predict and
generally beyond the control of SIRIUS and XM. Actual results may differ
materially from the results anticipated in these forward-looking
The following factors, among others, could cause actual results to
differ materially from the anticipated results or other expectations
expressed in the forward-looking statement: general business and economic
conditions; the performance of financial markets and interest rates; the
ability to obtain governmental approvals of the transaction on a timely
basis; the failure of SIRIUS and XM shareholders to approve the
transaction; the failure to realize synergies and cost-savings from the
transaction or delay in realization thereof; the businesses of SIRIUS and
XM may not be combined successfully, or such combination may take longer,
be more difficult, time-consuming or costly to accomplish than expected;
and operating costs and business disruption following the merger, including
adverse effects on employee retention and on our business relationships
with third parties, including manufacturers of radios, retailers,
automakers and programming providers. Additional factors that could cause
SIRIUS’ and XM’s results to differ materially from those described in the
forward-looking statements can be found in SIRIUS’ and XM’s Annual Reports on Form 10-K for the year ended December 31, 2005, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006 which are filed with the Securities and Exchange
Commission (the “SEC”) and available at the SEC’s Internet site
(http://www.sec.gov). The information set forth herein speaks only as of
the date hereof, and Sirius and XM disclaim any intention or obligation to
update any forward looking statements as a result of developments occurring after the date of this press release.
Important Additional Information Will be Filed with the SEC
This communication is being made in respect of the proposed business
combination involving SIRIUS and XM. In connection with the proposed
transaction, SIRIUS plans to file with the SEC a Registration Statement on Form S-4 containing a Joint Proxy Statement/Prospectus and each of SIRIUS
and XM plan to file with the SEC other documents regarding the proposed
transaction. The definitive Joint Proxy Statement/Prospectus will be mailed
to stockholders of SIRIUS and XM. INVESTORS AND SECURITY HOLDERS OF SIRIUS
AND XM ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
Investors and security holders will be able to obtain free copies of
the Registration Statement and the Joint Proxy Statement/Prospectus (when
available) and other documents filed with the SEC by SIRIUS and XM through
the web site maintained by the SEC at http://www.sec.gov. Free copies of
the Registration Statement and the Joint Proxy Statement/Prospectus (when
available) and other documents filed with the SEC can also be obtained by
directing a request to Sirius Satellite Radio Inc., 1221 Avenue of the
Americas, New York, NY 10020, Attention: Investor Relations or by directing
a request to XM Satellite Radio Holdings Inc., 1500 Eckington Place, NE
Washington, DC 20002, Attention: Investor Relations.
SIRIUS, XM and their respective directors and executive officers and
other persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding
SIRIUS’ directors and executive officers is available in its Annual Report
on Form 10-K for the year ended December 31, 2005, which was filed with the
SEC on March 13, 2006, and its proxy statement for its 2006 annual meeting
of stockholders, which was filed with the SEC on April 21, 2006, and
information regarding XM’s directors and executive officers is available in
XM’s Annual Report on Form 10-K, for the year ended December 31, 2005,
which was filed with the SEC on March 3, 2006 and its proxy statement for
its 2006 annual meeting of shareholders, which was filed with the SEC on
April 25, 2006. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the Joint Proxy
Statement/Prospectus and other relevant materials to be filed with the SEC
when they become available.