Bottom line,what would the XM and SIRIUS merger do for the SIRIUS stock?

Question

would a merger make the Sirius stock increase in value?

Answer 1

I think Green... is correct. In the last several months XMSR has stayed basically flat with a little bump when they got some good news on the merger. SIRI is in pretty close lock step. XM Stockholders will get 4.6 Sirius shares.

SIRI closed at 3.61 today that would equal $16.60 for XM holders which closed at $15.34. About a 10% arbitrage.

And to top it all off, there are some analysts who said earlier this week they are now not as sure the deal will go through.

If that happens both companies insist they'l be OK on their own as separate entities - and they can try again after the elections (my thoughts).

If the deal goes through, my opinion is SIRI will go down (because of the dilution) and XM will go up and they'll meet somewhaere in the middle for the combined new company's first combined closing at $2-$3. Once speculators see there's not a fortune to be made, they'll bail out, take any profits and the combined stock, after some flux, will end up between $3-$6 and stay there for a while.

One of the investment firms (Stifel Nicolaus & Company) just readjusted their projected 12 month SIRI price to $4.25 from $4.75 - still rated a buy.

- a guy named duh

Answer 2

Hard to say.  As an investor, I would be concerned as one company, who has never made a profit, acquires another company, that has never made a profit.  Both companies have billions in debt.  I will say there will be much speculation, which will increase if the merger is approved for a few months.

In order for the stock to increase in value, the company will need to become profitable.  Either by increasing the monthly subscription price or accepting more advertisers.