Friday, February 16, 2007

Bear Stearns: Proposed Merger Might Pass Regulatory Hurdles

Bear Stearns Rekindles XM/Sirius Merger Chatter
Posted on Feb 16th, 2007 with stocks: SIRI, XMSR

Notable Calls submits: Bear Stearns out with an interesting note, saying that they think both XM Satellite (NASDAQ:XMSR) and Sirius (NASDAQ:SIRI) believe a proposed merger could likely pass the regulatory hurdles, which they think would push them to attempt a merger. However, beyond the initial warming public comments made by both companies in early January, the public potential deal talk has slowed, hampering both share prices (XM is down ~25% since its recent highs and Sirius is close to 52 week lows).

Firm believes any public progress of making a deal has been slowed by the economics of the exact split in a merged company. However, they think that the sheer value proposition of a potential deal for both sets of shareholders vastly overshadows any disappointment in share of a merged company. Due to a closing window of opportunity (based on how long we think it would comfortably take to close a potential deal), firm thinks investors would implore the boards of both companies to avoid quibbling over a few share points, to capture the much larger value of overall potential synergies. This would maximize shareholder value for both companies...continued

Labels: bear stearns, merger, sirius, xm