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 /PRNewswire-FirstCall/ -- 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
entertainment.
* 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
technologies.
"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.
About SIRIUS
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 http://shop.sirius.com.
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.
About XM
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 http://www.xmradio.com.
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 statements.
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 PROPOSED
TRANSACTION.
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.
Contacts
SIRIUS
Media Relations
Patrick Reilly
212-901-6646
PReilly@siriusradio.com
Investor Relations
Paul Blalock
212-584-5174
PBlalock@siriusradio.com
Hooper Stevens
212-901-6718
HStevens@siriusradio.com
XM
Media Relations
Nathaniel Brown
212-708-6170
Nathaniel.Brown@xmradio.com
Chance Patterson
202-380-4318
Chance.Patterson@xmradio.com
Investor Relations
Joseph Wilkinson
202-380-4008
Joe.Wilkinson@xmradio.com
Richard Sloane
202-380-1439
Richard.Sloane@xmradio.com
SOURCE SIRIUS Satellite Radio; XM Satellite Radio
