Why Sirius XM Canada Plan Faces Battle


Sirius XMWhat does Sirius XM Canada gain by going private? A number of things.

That is, if it happens as planned. Smaller shareholders in the Canadian firm say the company is being undervalued and they vow to fight the current deal.

SiriusXM and its Canadian counterpart have agreed that SiriusXM will boost its ownership stake from 35% to 70% and spend some $275 million in the process. This will happen as SiriusXM Canada takes itself from a public to a private company.

Sirius XM Canada’s shareholders will be entitled to elect to receive, for each share of Sirius XM Canada held, consideration of C$4.50 in cash, shares of SiriusXM common stock, a security exchangeable for shares of SiriusXM common stock, or a combination thereof.

Independent shareholders tell the Financial Post XSR is worth more than C$4.50 a share.

No more than 35 million shares of SiriusXM’s common stock will be issued in connection with the transaction. Once the recapitalization closes Sirius XM Canada will continue to operate under Canadian voting control.

Slaight Communications and Obelysk Media will, on a combined basis, own 67% of the voting shares of Sirius XM Canada and 30% of the economic interest in the recapitalized business. Independent shareholders say the board makeup favors special interests and the members aren’t protecting the rights of all shareholders.

SiriusXM will increase its economic ownership of Sirius XM Canada from 37% to 70% and own 33% of the voting shares.

SiriusXM CEO Jim Mayer said the deal would “vastly” improve “the cooperation between the two companies on next generation products and services.”

The Canadian Broadcasting Corporation would no longer be a shareholder in Sirius XM Canada, however it will still be a program supplier.

The proposed recapitalization is subject to approval of the Sirius XM Canada shareholders, Canadian regulatory approvals, and other closing conditions. SiriusXM expects the recap to close by Q4. After closing, Sirius XM Canada will no longer be a publicly traded stock.

RBR+TVBR observation: The move further consolidates satellite radio. This makes it easier for to launch products and services over the North American platform. It may also help ease a dispute in $35 million in activation fees that the U.S. company said its Canadian counterparts owed them. And despite the unhappiness of some independent shareholders, some form of the deal will happen.