Satellite radio giants XM and Sirius have reached an agreement to merge in an all stock deal, it was announced today (Feb. 19).
The new company, which does not yet have a name, will be worth $13 billion including debt of almost $1.6 billion dollars. XM shareholders will receive 4.6 shares of Sirius common stock for each share of XM they own.
Rappers like Eminem, Grandmaster Flash, 50 Cent and DJ Premier have channels or shows on Sirius, while XM has deals with rappers like Ludacris, Snoop Dogg, Talib Kweli, Trick Daddy, Jermaine Dupri and others.
Under the new deal, XM and Sirius shareholders will each own approximately half of the combined company, which will be headed by Sirius’ current CEO, Mel Karmazin.
“This combination is the next logical step in the evolution of audio entertainment,” said Karmazin, CEO of Sirius Satellite Radio. XM and Sirius will continue to operate independently until the transaction is complete. Both companies will decide the new company’s name and primary business location.
The merger still faces antitrust scrutiny from the Department of Justice.
Also, a clause in the FCC laws state that one satellite radio operator cannot own the other is expected to be a hurdle.