Tuesday, February 20, 2007

Merrill Lynch On Merger

February 20, 2007

Report Excerpt:

XM and SIRI announce merger of equals

XMSR and SIRI announced an agreement to merge in a tax free, all stock merger
of equals (50% owned by SIRI shareholders and 50% XM shareholders) with a
combined enterprise value of $13bb (including $1.6mm debt). XM shareholders
will receive 4.6 shares of SIRIUS common stock for each share of XM. Mel
Karmazin (CEO of SIRI) will be CEO and Gary Parsons (Chairman of XMSR) will
be the Chairman of the merged company. The transaction is expected to close,
pending shareholder and regulatory approval, during the next 6-9 months.

Change XMSR to “No Rating”

Given SIRI will be the surviving entity in the announced merger transaction and
XMSR shares will now trade based on its exchange ratio to Sirius, we are
changing our rating on XMSR to “No Rating” from Neutral. Investors should no
longer rely on our previous estimates or rating. Please refer to our SIRI note “And
then there was one” published on February 20, 2007 for details regarding the
merger and estimated cost synergies

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2/20/2007 09:32:00 PM

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