Cramer, NAB, Analysts Weigh in on Sirius/XM Merger Decision

Do you think that Jim Cramer had a comment Monday on the Sirius (SIRI) and XM (XMSR) merger? You bet, the popular CNBC host applauded the DOJ decision to approve the merger, but also cautioned that the deal needs FCC approval. Cramer, who now puts a $5 target on Sirius, outlined some concerns regarding the FCC decision. Cramer’s target for Sirius would imply a $23 target for XM.

Simply stated, Cramer feels that the FCC may be tempted to block the deal. Cramer’s solution… Contact the FCC. Cramer is calling on consumers to let the FCC know that they want the merger approved.

It is certain that those against the merger will step up their efforts after failing to sway the DOJ to their side. Those against the merger now have one last shot to get the deal blocked, or at least chase their wish list of concessions. Now it is upon consumers to ensure that the FCC understands that consumers want the merger, and not just a few, but a large number of consumers want it.

Consumers can express their opinion by visiting SiriusMerger or XMMerger.

Lucas Binder of UBS also issued a report Monday on the DOJ approval of the Sirius and XM merger.

Report Excerpts:

Monday, the DOJ approved the SIRI-XMSR merger. The DOJ concluded that the acquisition would not harm competition. The DOJ found that while SIRI and XMSR compete for customers, there is little competition for consumers who have already subscribed to one of the services. The original merger was announced on February 19, 2007. The agreement calls for 4.6 shares of SIRI for each share of XMSR. Based on SIRI’s price of $3.16, it implies a price for XMSR of $14.54 (4.7% spread).

The next step in the process is for the FCC to make its own decision. We believe that the FCC was waiting for the DOJ to make an announcement before giving its ruling. We believe the FCC will likely approve the merger early in 2Q08.

Stifel analyst Blair Levin issued a report Monday as well.

Report Excerpts:

DOJ Clears XM-Sirius Merger Without Conditions; FCC End Game Next

• The DOJ has announced it will not move to block the proposed satellite radio merger of XM and Sirius, and it did not impose any conditions.

• Next, the companies need to gain the approval of the Federal Communications Commission, which is reviewing license transfers needed to close the deal.

• We believe the companies will likely be able to win FCC clearance, but we expect the agency will seek and obtain a number of conditions on the merger in a process that could still take a number of weeks.

The Department of Justice has announced that it has closed its review of the proposed satellite radio merger of XM and Sirius, and without imposing any conditions. This is consistent with our bottom-line expectations when the deal was first announced.

The report outlines several possible FCC concessions that may be considered, and potential political strategies that may be utilized to gain additional concessions or prolong the vote.

Position - Long Sirius, XM

Comments

[mdog]

I currently have small holdings in siri (250 shares) and xm (100). Iwould like to sell but want opinions on when (and if) the share prices might rise because of the impending approval. How do I maximize the conversion of xm to siri shares. (I bought siri at 2.36 and xm at 11)
mdog