TORONTO – Sirius XM Canada’s parent has agreed to recapitalize the company by way of a go-private transaction, the satellite radio service said Friday.
U.S. partner Sirius XM Holdings is offering $4.50 per share cash, Sirius XM Holdings Inc. (SIRI) shares or Canadian shares exchangeable into SIRI shares. The total transaction consideration is approximately $351 million, and represents a premium of 22.3% to SiriusXM Canada's unaffected closing share price on February 11, 2016.
SiriusXM Canada's largest Canadian shareholders, CBC, Slaight Communications, and Obelysk Media, are supportive of the recapitalization, says the news release. CBC is planning to sell its stake in the company, and Slaight Communications and Obelysk Media are committing to voting for the offer and selling 89% and 87% of their shares respectively into the offer. Upon completion of the transaction, both Slaight Communications and Obelysk Media will each own 33.5% of the voting shares of SiriusXM Canada for a combined total of 67%, and 15% each, or 30% combined, of the equity in the recapitalized business, with SiriusXM owning the balance of votes and equity. While CBC will cease to be a shareholder in SiriusXM Canada following the transaction, it will continue to support the company as a programming partner, the release continues.
“We are a proud Canadian player in the audio entertainment market, and we need to make changes to continue to successfully compete”, said SiriusXM Canada president and CEO Mark Redmond, in the release. “Our operating environment is changing fast, creating long-term growth headwinds. We believe the Recapitalization is a necessary step in overcoming these challenges."
The deal is subject to the approval by 66 2/3% of the votes cast by SiriusXM Canada shareholders at a special meeting, as well as by a majority of the minority of the SiriusXM Canada shareholders, which will exclude SiriusXM, Slaight Communications and Obelysk Media. It is also subject to receipt of court and any necessary regulatory approvals, including CRTC approval. It is expected to close before the end of this year.
Upon completion of the recapitalization, SiriusXM Canada said that it will maintain its Canadian headquarters in Toronto, preserve the SiriusXM Canada brand, continue to support development of Canadian content, and ensure a strong Canadian led governance structure.
