[2/20/07] XM Satellite Radio and Sirius Satellite Radio on Feb. 19 announced a definitive agreement under which the companies would combine 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, current CEO of Sirius, will become CEO of the combined company. Gary Parsons, current chairman of XM, will become chairman. The new company’s board will have 12 directors: Karmazin and Parsons plus four independent members designated by each company, and one representative from both General Motors and American Honda. Hugh Panero, CEO of XM, will remain in that role until the anticipated close of the merger.

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.