Pending. It is a fitting word for Sirius and XM. The merger is pending. Annual meetings will be held pending a decision on the pending merger. The FCC decision is pending while investors wait on the pending merger and the pending annual meetings. Investors are waiting for pending news on the merger so that they can receive the pending guidance from the company on the outlook of satellite radio going forward. There is so much pending in SDARS that Sirius or XM should trademark the name.
The latest in the pending column is the extension of the merger agreement between Sirius and XM. Once again, pending news has people considering many things as it relates to the sector. One thing in my opinion is certain. The pending decision regarding the merger deal extension will be an extension of the deal at the current terms.
With DOJ approval in the bag, a shareholder vote that has already approved the deal, and what is anticipated to be an imminent decision, the only real choice these companies have is to continue the course or walk away, and walking away is not a realistic option.
Some invested in one equity or the other feel that the company they are invested in should have gotten a better deal. I have seen arguments on both sides of this issue. My opinion is that this deal came to a point where neither party (XM or Sirius) outright won or outright lost. The deal was about as "fair" as it could be. One has better retail presence, the other has longer term OEM deals. One has Strern, the other says only for a couple of years. One has the NFL, and the other MLB. Each accuse the other of overspending. One has higher debt, the other has future capex costs that will become debt. One has newer satellites, the other has Mel Karmazin. The arguments could go on all day, and in many ways the arguments are quite subjective. In the end, we have two companies that will merge, create synergies, and take the sector from losses to profits.
Thus, while the deal extension news is PENDING, investors should consider that there is only one real course of action that will be taken. They will extend the deal as it is currently constituted. Plain and simple. No renegotiation, no new shareholder vote, no real fanfare. The only real answer is obvious, and when it is announced, at least we can remove one pending from the situation.
Position - Long Sirius, Long XM