Sirius Satellite Radio, Inc. (SIRI) said Monday that it expects total net synergies of about $400 million in 2009 if it completes its pending acquisition of rival XM Satellite Radio Holdings Inc. (XMSR).
New York-based Sirius said it expects total synergies, net of the costs to achieve such synergies, for the combined company to be about $400 million in 2009.
Sirius said adjusted net income before interest and investment income, interest expense, depreciation expense, and non-cash stock compensation expense for the combined company is expected to be about $300 million in 2009.
Sirius also said the combined company is expected to achieve positive free cash flow, before satellite capital expenditures, in the full year 2009.
To date, neither SIRIUS nor XM has reported positive adjusted EBITDA or achieved free cash flow for a full year.
Sirius warned that the guidance is based on the expectation that the merger will be consummated in the third quarter of 2008, that XM will incur certain incremental interest expense as a result of refinancing certain of its debt, that the combined company will realize certain additional advertising and subscriber revenue synergies as a result of the merger and that the combined company will achieve cost savings and efficiencies in nearly all aspects of its operations.
The merger deal, which offers 4.6 shares of Sirius for every XM share, was unveiled in February 2007. Sirius and XM shareholders approved the merger deal in November 2007. In March, 2008, the U.S. Justice Department also gave green signal to proceed with the merger. However, the deal awaits approval from the Federal Communications Commission or FCC.
Earlier this month, The Wall Street Journal revealed that that staff of the FCC will recommend that the merger go ahead. Meanwhile, other media outlets also reported that Kevin Martin, chairman of the government regulator, is behind the proposed deal. According to the reports, Martin's backing came with several conditions, which the FCC staff plans to suggest as necessary for the merger to go ahead.
Sirius shares are currently trading at $1.94, down 16 cents or 7.62%, while XM shares are currently trading at $7.87, down 20 cents or 2.48%.
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