Satellite radios XM, Sirius Canada to merge

Wed Nov 24, 2010 4:11pm EST
 
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TORONTO (Reuters) - Canadian Satellite Radio Holdings Inc said on Wednesday it is merging XM Canada and Sirius Canada in a deal that will bring together the Canadian licensees of the Sirius and XM satellite radio platforms two years after the U.S. broadcasters merged.

The C$520 million all-stock deal includes about C$130 million in long-term debt. Once completed, it will see U.S. based Sirius XM Radio Inc with a 37.1 percent equity stake in the new company.

After the merger, CSR's Chairman John Bitove will see his voting interest in the company more than halved to 30 percent, the company said.

Sirius XM Radio Inc, the Canadian Broadcasting Corp and Slaight Communications would be other major shareholders in the new company, which will have a subscriber base of 1.7 million.

The combined company said it expects to be able to cut costs by C$20 million within 18 months, even as it pursues growth in the Canadian audio-entertainment market.

On a trailing 12-month basis, the combined company will have pro forma revenues in excess of C$200 million, EBITDA of approximately C$7 million, and long-term debt of approximately C$130 million, CSR said.

"In the current economic environment and with increasing pressures on technology and innovation, we need to build a firm that is well-resourced to compete, and both companies realized that we would become stronger as a result of this merger," Bitove said on a conference call with analysts.

The transaction is subject to approval by CSR shareholders at a special meeting to be held in February.

CSR shares rose as much as 15 percent to a 52-week high of C$3.76 on Wednesday afternoon on the Toronto Stock Exchange.

(Reporting by Supantha Mukherjee in Bangalore; Additional reporting by Pav Jordan in Toronto)