Ending months of rumor, XM Satellite Radio and Sirius Satellite Radio have entered into a definitive agreement to combine the companies, under a tax-free, all-stock merger of equals with a combined value of about $13 billion, which includes net debt of about $1.6 billion.
Under the agreement, XM shareholders will receive a fixed exchange ratio of 4.6 shares of Sirius common stock for each share of XM they own. XM and Sirius shareholders will each own about 50 percent of the combined company.
Mel Karmazin, currently CEO of Sirius, will become CEO of the combined company and Gary Parsons, currently Chairman of XM, will become chairman. The new company’s board of directors will consist of 12 directors, including Karmazin and Parsons, four independent members designated by each company, as well as one representative from each of General Motors and American Honda. Hugh Panero, the Chief Executive Officer of XM, will continue in his current role until the deal closes.