TORONTO – The SiriusXM Canada satellite radio service is poised to undergo ownership changes, with its current American partner becoming majority shareholder but voting control resting with two existing Canadian investors.
The complex plan — designed to meet Canada’s foreign ownership rules — comes as the satellite radio industry faces an ever-changing media world that now includes Internet alternatives as well as conventional radio.
“It’s no secret that our operating environment is rapidly changing,” Mark Redmond, president and CEO of SiriusXM Canada, said on a conference call with analysts to discuss the offer from Sirius XM Holdings (Nasdaq:SIRI).
“An expanded relationship with Sirius XM will provide us with access to existing and future technologies and products and services not included under our existing licence agreements.”
The offer comes at a time SiriusXM Canada needs to renew important licensing agreements with its larger American counterpart — which aims to buy out most of the Toronto-based company’s other shareholders for $351 million in cash or stock.
Sirius XM Holdings — which already owns a stake in the Canadian company — is offering $4.50 per share cash or 0.898 of a share for each Sirius XM Canada share. The number of U.S. shares available is capped at 35 million.
Redmond described the offer from the American company as financially fair to shareholders, adding that it would reduce the long-term risks associated with the business.
The Canadian company’s current shareholders also have an opportunity to remain invested in the industry if they opt to take shares of the U.S. company rather than cash, he added.
The deal require consent from the Canada Radio-television and Telecommunications Commission, the industry’s regulator, and other approvals
SiriusXM Canada currently has about 2.7 million subscribers.
Slaight Communications and Obelysk Media, two Toronto-based companies that have been involved with Sirius XM Canada and its predecessors since the beginning, will end up with 30 per cent and 67 per cent of the voting shares.
The CBC — another major shareholder with a 9.6 per cent voting interest and 10.6 per cent economic stake — will sell all of its shares, but remain a programming partner.
CBC president Hubert Lacroix said in a statement that “we see this transaction as a good opportunity to monetize our non-core investment in SiriusXM Canada and we intend to vote our shares in favour of the privatization.”