XM Satellite Radio and Sirius Satellite Radio 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 Sirus shareholders will each own approximately 50 percent of the combined company.
Mel Karmazin, currently CEO of Sirius, will become CEO of the combined company and Gary Parsons, currently chairman of XM, will become chairman of the combined company.
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.
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.