Rumor has it that Honda Motor Co. Ltd., is about to take a major stake (+25%) in XM Satellite Radio Holdings Inc., and has received government approval for it.
Below is the government form that terminates some type of limitation that has previously existed.
That's all the details known as this time. More to follow. At this time this should be taken as a strong rumor only but the early termination definitely indicates something is happening.
[FTC Early Terminations, 08-15-06] (PDF)
Wow, huge news for XM if it's true. Maybe I'll trade in my '04 Civic for an '07 model... :-D
WOW!
Okay. So we have a form dated today that says:
"Transaction Granted Early Termination" and "Transaction # 20061538" and "Honda" and "XM". That's all it says.
And we're concluding, based on this, that Honda is buying 25% of XM?
This clearly doesn't rise to the high standard of a "rumor" and should not be given such status.
Call it a "Speculation Without the Slightest Support". Or "Wishful Thinking".
But it is far less credible than the worst of rumors.
What will Toyota and GM think about this?
Wow is right. If HMC buys 25% of XM, that would mean a couple of things:
-Obviously HMC is going to pay up for the shares, which will indicate/validate XM is undervalued.
-This will really cement OEMs here & help investors realize OEMs will in fact materalize--something I was worried about.
It boils down to this--IF XM becomes a factory installed standard in all cars made by its OEM partners, it's a $100 stock. If it doesn't its a $10 stock at best.
-Lord Westfall
Well there is the huge dilema of having a 60% drop rate on OEM installs. If Honda takes a stake in XM and make it standard equipment they will drive up SAC costs. Imagine 2million Hondas with standard XM and it amounts to 800k subs. XM needs more than money at this point.
Will this be like when Burger King got rid of Pepsi because they owned Taco-Bell. Why would GM keep supporting X M if it helped Honda? Just thinking down the road, might want to think this through.
>> Will this be like when Burger King got rid of Pepsi because they owned Taco-Bell. Why would GM keep supporting X M if it helped Honda? Just thinking down the road, might want to think this through. >>
Good point, but Honda sells an *awful* lot of cars worldwide, and if XM comes standard with ALL of those vehicles, I don't think GM would be missed.
Early Termination notices such as this are a part of the Premerger Notification Act. The act generally requires 30 days before a company makes a sizable acquisition in another company so that the FTC and Dept. of Justice can review it for antitrust purposes.
Early Termination, if requested, allows for purchases to happen sooner if all forms are filed and there are no antitrust problems seen.
According to XM's last proxy statement, Honda holds just over 11 percent of XM shares as of March 31. At Friday's share price (note, I'm shorthanding a few of the numbers), that is about 350 million dollars in share value.
Their are several thresholds that require notification, several of which this has already cleared. The next level from here would be ownership in total of 500 million or more. At today's share price, that would be at 16.3 percent, an additional 5 percent over Honda's current holding.
So, what would all of this say to me? There is smoke here. I don't know if it's a fire, but Honda does seem to be working on something with this. It may not be 25 percent, but additional ownership certainly seems to be in the works.
But let's not forget that GM also has a stake in XM, or at least they used to. And also let's not forget that Toyota and GM have shared plants for a number of their vehicles also. Suzuki and GM have also worked together. And what about Chrysler and Mitsubishi, aka Diamond-Star Motors? Why wouldn't one car company help another out, if it ends up helping them both out?
what every one forget's here is that honda is helping gm build there motor's for there smaller car's. my brother works with gm and honda and tells me every thing new and if honda want'd to buy out xm they would just do it.