Are XM & Sirius Closer To Merger Approval? (XMSR, SIRI)

We haven’t had a whole lot to say regarding Sirius Satellite Radio’s (NASDAQ:SIRI) acquisition of XM Satellite Radio (NASDAQ:XMSR) of late.  It’s being penned as a merger of equals, but everyone knows the truth by now.  This has been viewed as one of the most ‘in-jeopardy’ mergers out there.  The FCC has mostly been against the deal the entire way through, but this may be taking a turn for the better.  The company had an SEC filing early this morning, and here are the guts of the filing:

• On September 4, 2007, we and XM Satellite Radio Holdings Inc. each certified to the Antitrust Division of the U.S. Department of Justice that we were in substantial compliance with its Request for Additional Information relating to our pending merger. We are continuing our cooperation with the Department of Justice in its review of this matter.
• We continue to expect that the merger will be consummated by the end of 2007.

This sort of seems and feels like a salesperson using the assumptive close, but it is at least one more bit of confidence when you consider that the companies just a couple months ago were using much more cautious verbage in their communications.  Shares are also doing better than when we were noting them on the 52-week lows day in and day out.

This morning the companies also issued a press release with former FCC chairman Mark Fowler ‘calling for approval of satellite radio merger.’  Here is the link at the New York Sun online to see what Mr. Fowler said.  You can also access more data at SIRIUSMERGER.COM or XMMERGER.COM.

The INTRADE stats are’t showing all that much but the underlying shares are up quite strong on a down day.  SIRI shares are up over 5% at $3.17, still above that $3.00 critical mark; and XMSR shares are up 4.2% at $13.25. Options are likely too expensive for these shares because there have not been many trades in the December put and call option contracts.

There was a while where this one was looking like a do or die situation, although SIRIUS did score its $250 million term-loan recently and at one point this was lightly defended at S&P.  UBS also defended these shares a few months ago when the stocks were a hair under the price levels of today.  There are still some hurdles that the companies have to address and overcome, but this is so far being received with open arms by shareholders today.

Jon C. Ogg
September 5, 2007

Jon Ogg can be reached at [email protected]; he produces the 24/7 Wall St. Special Situation Investing Newsletter and he does not own securities in the companies he covers.