TORONTO – Satellite radio competitors XM Canada and Sirius will merge in Canada, just as their American parent companies did over two years ago.
Wednesday’s announcement said that the all-stock merger values the combined company at approximately $520 million, which includes long-term debt of $130 million.
Under the terms of the agreement, Sirius Canada shareholders will be issued treasury shares of XM Canada parent Canadian Satellite Radio Holdings Inc. (CSR) representing a 58.0% equity interest in CSR immediately following closing of the transaction. The approximate ownership interest in CSR following closing of the combination transaction will be as follows:
– CSRI Inc., an entity controlled by John Bitove, the chairman of CSR, 30.0% voting interest (22.7% equity interest);
– CBC/Radio-Canada 20.2% voting interest (15.0% equity interest);
– Slaight Communications 20.2% voting interest (15.0% equity interest);
– Sirius XM Radio Inc. 25.0% voting interest (37.1% equity interest).
The remainder will be "widely held".
"This creates long-term shareholder value for CSR," said Bitove, in the announcement. "As a combined entity, XM Canada and Sirius Canada will deliver exceptional value to subscribers, and enhance the long-term success of satellite radio in Canada."
Pending CRTC approval of the deal, John Bitove will be chairman of CSR, Mark Redmond, the current president and CEO of Sirius Canada, will be president and CEO, and Michael Washinushi, the current CFO of XM Canada, will be CFO. Michael Moskowitz will remain as CEO of XM Canada and Jason Redman will remain as CFO of Sirius Canada through the approval process and transition. The new board of directors will consist of nine directors, including two directors nominated by each of CSR and Sirius XM, one director nominated by each of CBC/Radio-Canada and Slaight Communications and three independent members.
"The benefits of a merger are clear and together we’ll be better able to create more growth and opportunity for shareholders, accelerate technological innovation and ensure that satellite radio is able to compete in the rapidly evolving audio entertainment industry," added Redmond. "This combination is the next logical step in the evolution of satellite radio in Canada."
The combined company will have a total subscriber base of over 1.7 million. Subscribers will continue to be offered a range of commercial-free music, exclusive sports coverage, news, talk and entertainment programming, plus a ‘best-of-both’ channel package over time, the announcement detailed.
The companies will continue to operate independently until the transaction is completed. It remains subject to approval by CSR’s shareholders (other than Sirius XM and its affiliates) at a special meeting anticipated to be held in February 2011, a refinancing of CSR’s current indebtedness, regulatory review and approvals, as well as the satisfaction of certain customary conditions for a transaction of this nature.
