The Merger Clock No One Is Worried About
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
Could it just be, would it be thinkable that, still lacking a decision by either DoJ nor FCC, the deal could silently and at no cost expire by March 1st and then be renewed at better, different, say lower terms?
Or for that matter, newer legal language to be used that would not stand in the way of the regulators?
Don’t forget, both companies have a learning curve of one year by now and gotten wiser, no doubt.
Both would, by just letting expire the mergercontract, be able to secure more profitable, more feasible new contractdetails, leaving the ‘old’ opponents in the legal dust, since there would arise a new situation.
In fact one could say that by having been dragged along, both companies at this stage could benefit from dragging their feet themselves and create a new smooth fairway for a new round of mergergolf.
What do you think?
Isaac
No way! The companies need shareholders’ approval for important decisions.
A good strategy in my humble opinion is for SIRIUS to walk away and let XM die.
Mel can easily team up with APPLE or a similar competitor and have SIRipods all over the market. This will eventually make SIRIUS and the best sat-radio content widely availiable.
The government will have lost its big opportunity to condition the only one survivor in the SDARS delivery. XM radios will be junk in the dashboards.
There will be no price reductions and no a-la-carte. Consumers will be a little upset with limited choise but the company will thrive.
How does that sound DOJ and FCC?
Hey NAB what do you think? How do you like SIRi-pods? Who could want 20% of the SIRI APPLE deal? A-la-carte? Forget it Mr. Martin. Content and family friendly options will no more limit the number of customers that Howard Stern will get? Imagine SIRI content delivered in pod-casts. That will be the future if the DOJ says no.
First of all XM or SIRI is not going totally belly up they could file chapter 11, 13 leaving shareholders holding the bag, and emerge stronger like the airlines did, or be picked up by some other company. Once again leaving shareholders out in the cold. There are to many assets out there for ether company to just disappear, and make the other the only satilite company arround.
Isaac, I hope you are not thinking that they would start this process all over again. that it highly highly highly unlikely, as Tyler has stated they both have to much time and money invested for that. Plus time maybe running out depending on with Party gets the presidency.
In my opinion these cvompanies will not let this deal expire. The process they have gone through would have to start all over again. They have already made it this far, they will continue the course.
I’ve been antsy for a while, as have we all. But lately, I’ve been starting to think or feel that we may just be getting ready to be fucked on this thing. Maybe it’s just anxiety, and I hope it is, because I’ve got some financial eggs in this basket that I’m concerned about…
You know the feeling… The situation where you just know you’re about to get fucked, but it’s too late to do anything about it, so you just start hoping.
But then again, I think the NAB has been feeling this for a while and they’re still banging the drum.
Mario, please dont tell me you put money in this speculative play that you could not afford to lose. Also even without the merger, chances are at least one or both will go on as its original company. Dish and Directv did just fine without a merger. I personally would just like a decision so they can move on, and both can stop throughing money into it.
Please excuse a novice. If a company files for bankruptcy protection, chapter 11 or ?, what happens to the shareholders? Do they just lose their stock? If the company comes back strong, do they have anything?
I can afford to lose it, but I would still much rather make money. I’ve been in it for over a year, and I have made no return….
To lose money would not piss me off completely, but to lose it because the merger is refused for no good reason other than politics and bureaucracy would really make me mad.
>>> Do they just lose their stock? If the company comes back strong, do they have anything?
As a general rule, the first thing that happens in a bankruptcy is the shareholders lose their interests. They WILL come back stronger companies, but it is highly unlikely existing shareholders will share in that recovery.
Very well put FrontMed it’s nice to see we can agree on something. I would add though, it depends on which is filed, Chapter 11 chances are yes, it is used mainly as protection until finances can be restructured. If they go from Chapter 11 to Chapter 13 no way in hell forget it (think Kmart).