XM Shares Still Exist
The merger deal specifies that each XM share will receive 4.6 shares of Sirius once the deal is consummated. While regulatory approval is in hand, Sirius and XM have not yet consummated the deal, and until they do, XM shares will still exist.
In my opinion, Sirius and XM likely have a few financing items to accomplish over the weekend and on Monday, before they can get down to the proper authorities to set the deal in stone. This could cause a bit of a race. Sure, the NAB or another organization can try to throw a wrench into the works, but most agree that such an effort would be futile. Sirius and XM will be doing everything they can to get this deal finalized.
This could give another day or two of trading. Readers will likely see some roller coaster trading as shorts unwind their positions, those on the sidelines try to get a quick play on the spread, and the companies and organization jockey for headlines. Through all of that, what investors need to remember is that the merger has received regulatory approval. No matter what your trading strategy, this fact will remain constant until the paperwork is finally filed.
Position: Long Sirius, XM.
On the 2007 Q3 conference call with analysts, Mel was asked by the Deutsche Bank analyst: “how quickly could you close after getting regulatory approvals?”
Mel answered: “…assuming we get an approval on a Monday, the assumption will be that the transaction will be closed on Tuesday.”
http://tinyurl.com/56n5hz
XMSR will likely trade on Monday. But I suspect Mel is pushing his lawyers to get this done before the market opens Monday morning. They have certainly had time to make contingency plans and arrangements for a possible weekend end run.
Next on the plate is the recap combined with a reverse stock split (I predict 1 for 10). I’m looking for that to happen relatively quickly.
Then comes the flood of PR about new products and new revenue-generating services that they have been silent about during the long hostage situation with the regulators.
Fasten your seat belts. After 18 months of silence on business development initiatives, the floodgates are about to open. Let’s get on with it.