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This article was published 24/11/2010 (2042 days ago), so information in it may no longer be current.
Merging satellite radio companies XM Canada and Sirius Canada Inc. want their service on more devices like smartphones, personal computers and in more vehicles to compete in the competitive audio entertainment industry.
The all-stock deal announced Wednesday by the two companies is valued at about $520 million and includes $130 million in long-term debt.
XM Canada and Sirius Canada said they will be more competitive in the digital music and entertainment industries, already crowded with options that range from iPods to traditional over-the-air radio stations.
"There is a great deal of opportunity for growth in the audio entertainment industry, in automotive, PC and mobile markets," said Michael Moskowitz, CEO of XM Canada.
Moskowitz noted that 10 years ago there were primarily CD players and radios, but the Internet, digital music players and smartphones now all deliver songs.
"Satellite radio has to evolve to keep up with those players and the combined entity will allow us to evolve more efficiently and effectively in the future," he told a conference call to discuss the transaction.
The combined company will have a total subscriber base of more than 1.7 million.
"There will be significant growth opportunities in the Canadian marketplace as we penetrate the population and the automotive sector, which continues to rebound," Moskowitz said.
The merger comes after longtime speculation that the two companies, which charge subscription fees for their services, would eventually combine their operations to save costs and put more listeners under the same umbrella.
A name hasn't been chosen yet for the merged companies, which will operate separately until regulatory approval has been given for the deal.
Their American counterparts, XM Radio and Sirius Satellite Radio, merged more than two years ago, but the Canadian companies had been coy about whether they would follow suit.
Sirius Canada, a private company that is 40 per cent owned by CBC Radio, 40 per cent by Slaight Communications and 20 per cent by Sirius XM in the United States, will end up with 58 per cent ownership of Canadian Satellite Radio Holdings Inc., which operates XM Canada.
"This all-stock merger of equals now creates a leading Canadian media company," said Canadian Satellite Radio chairman John Bitove, who will serve as chairman of the combined company.
"Standing together, Sirius Canada and XM Canada will become a stronger competitor in digital music and entertainment," he told the conference call.
Sirius Canada chief executive Mark Redmond said the merger will create $20 million in synergies within 18 months.
The transaction is subject to regulatory approval by the CRTC and is expected to be completed in the first quarter of 2011.
-- The Canadian Press