With the merger now being over a year old, and discussion about FCC and DOJ timelines getting headlines, there is another merger clock that no one is worried about. The merger clock on the agreement between Sirius and XM. Why is no one worried about this clock when it expires on March 1st? Because any reasonable person arrives at the conclusion that Sirius and XM will renew their agreement.
In point of fact, the merger agreement expires on March first, and with that expiration, either company could walk away from the merger and avoid a $175,000,000 penalty. In my opinion, and in the opinions of most who follow the sector, these companies are not about to give up on the merger. They will simply extend the deal. Sirius and XM have invested a lot in this merger, and they are not likely to walk away from it. Especially when it is rumored that regulators are finally getting close to a decision.
Sector watchers should look for filings and announcements from the companies in the next week or so stating that the agreement has been extended.
Some have felt that perhaps the DOJ and FCC are waiting simply to see if these companies become impatient and terminate the agreement. While I do not subscribe to this theory, I would venture to say that the companies extend the deal for a length of time that demonstrates their respective commitment to seeing this issue through. If we do hear some regulatory news prior to March 1st, then extension of the deal pending the decision of the other regulator is a virtual shoe in. With both companies having conference calls next week, and the expiration of the deal a few day later, the merger and SDARS will once again grab headlines and attention.
Position - Long Sirius, Long XM