Sirius, XM holders back satellite radio merger

By Franklin Paul

NEW YORK (Reuters) - Shareholders of both XM and Sirius satellite radio voted on Tuesday in favor of a planned $5.1 billion merger of the two rivals that still needs approval by the federal government.

Shareholders of Sirius Satellite Radio Inc approved the issuance of stock to help the company pay for the acquisition of rival XM Satellite Radio Holdings.

Shares of both companies jumped higher. Sirius stock ended Tuesday trading on Nasdaq up 6.5 percent to $3.63 and XM shares closed up 9.7 percent to $15.06, also on Nasdaq.

At a meeting in New York, Sirius, whose pay radio programming includes shock jock Howard Stern, lifestyle guru Martha Stewart and NFL Football, also approved a plan to increase the number of shares outstanding.

Meeting in Washington D.C., shareholders for XM, home to Oprah Winfrey and Major League Baseball, voted overwhelmingly to support the merger which must also be approved by the U.S. Federal Communications Commission and Department of Justice.

"We remain optimistic that the merger will be approved by the end of the year," XM said in a statement.

Traditional broadcasters have objected to the merger of the only two satellite broadcasters as anti-competitive. But XM and Sirius say they compete not only against each other but also against traditional radio and portable audio devices.

If the deal is not approved, Sirius Chief Executive Mel Karmazin told the Chicago Tribune in an interview published on November 9 that he would press on with the merger.

Asked by the Tribune what would happen if the FCC turned down the request to buy XM, Karmazin said bluntly: "Sirius will sue."

Karmazin would not be the first top executive to fight federal officials over a merger rejection in court this year.

The Federal Trade Commission lost a high-profile case when it sought to stop premium organic grocer Whole Foods from buying rival Wild Oats. Whole Foods completed the merger in late August after a federal court refused to block it.

In the XM-Sirius case, the FCC and Justice Department have not said how soon they will finish their separate reviews.

Under the merger agreement announced in February, XM shareholders would receive 4.6 Sirius shares for each XM share. The deal values XM at about $5.1 billion based on Tuesday's closing prices and the latest regulatory filing, which says XM has 306.9 million outstanding shares.

More than 96 percent of the shares voted were cast in favor of the transaction, Sirius said.

XM and Sirius stockholders will each own about 50 percent of the combined company, Sirius said.

(Additional reporting by Diane Bartz in Washington; Editing by Tim Dobbyn)