With the market cap of Sirius XM Radio hovering at around the $1 Billion dollar mark, it is easy to speculate that an interested party could begin to acquire shares, and perhaps even make a bid for the company. Many analysts agree that if the debt issue were behind Sirius XM Radio that the potential for the company improves dramatically.
In normal market conditions, the refinancing of Sirius XM Radio's debt would not bring many problems. But we are not in normal times. Some feel we are in crisis, and it has become more difficult to disagree with such an assertion. Back failures, mergers and acquisitions seem to now happen over breakfast on a Saturday. The current situation, across the board, has people more than a bit nervous.
Yesterday it was rumored that Rupert Murdock of NewsCorp has plenty of cash on hand, and may be looking at some deals in the near term. In fact, Murdoch has $5 billion that he may well be looking to use to acquire struggling companies. It would take a small portion of that to make a substantial investment into satellite radio.
Clearly, Murdoch has several media businesses, and a move on satellite could bring about regulatory scrutiny, but there is also a crisis happening, and perhaps Murdoch would be able to bring about such a transaction if he so desired. Murdoch has concentrated in businesses outside the U.S. recently, but is no stranger to the media world in the United States.
Murdoch investing in satellite is a pure hypothetical situation, but looking at it from the standpoint that Sirius XM has such a low market cap, it becomes much easier for virtually any entity with cash to make such a move. Given the current glass ceiling on many equities, including Sirius, a player could walk in and begin garnering shares without much worry about squeezing the price upwards.
With the stock price at .39 cents, financing as an overhang, and the market in general being pessimistic, there are many viable options on the table. Investors in the sector would be wise to consider many paths with regard to this or any equity.
via [Financial Times]
Position - Long SIRI, No Position NewsCorp.