SIRIUS Satellite Radio and XM Satellite Radio announced plans for a “tax-free, all-stock merger of equals” in which XM shareholders will receive 4.6 shares of SIRIUS common stock per 1 share of XM stock owned. The planned merger has raised eyebrows as to whether the Federal Communications Commission (FCC) will approve the combination, particularly as under a current FCC rule SIRIUS and XM are prohibited from acquiring each other’s licenses. Based on this FCC rule, one has to wonder whether this is termed a “merger of equals,” despite what looks like an acquisition of XM by SIRIUS, to evade harsher FCC scrutiny.
I. Terms of the Merger… of “Equals”?
Although termed a “merger of equals,” this transaction appears to fit the model of an acquisition of XM by SIRIUS. For one, XM shareholders will receive a certain amount of SIRIUS stock in exchange for their XM shares. Second, XM shareholders… Read the rest