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Sirius and XM Merger, Hot or Not?

By SumOfSome | February 16, 2007

Decision Point
 : If you get in early, you could see M&A optimism create some quick profits.
 : Roadblocks will likely cause a bleak road before long-term gains.

Sirius (Ticker:SIRI) and XM Satellite Radio (Ticker:XMSR) are one step closer to being one.  The two are currently at $3.70 and $13.98 respectively.  However, there are still concerns that should be considered.  First is the quick to mention concern over regulation.  Secondly, should the merger occur, how large is the gain for the organizations?  How many M&A motives will apply to this merger?  The two organizations do not have compatible services, which will mean on-going support for both devices before additional engineering can produce a new generation device.  Strike one for economies of scale.  Since the two companies offer competing and non-complementary services, they have no option of cross selling to increase revenue.  Finally, geographical advantages can be crossed off as the merger will not open the companies to new markets.  The true benefit of this “merger of equals” may take a while to present itsself.  I would expect some more dull times before any bright.

Topics: SIRI, Ticker, Trade, Trade Opinion, XMSR | No Comments »