XM Satellite Radio (XMSR) - SIRIUS Satellite Radio (SIRI)
May 14, 2008 (1:15p) - Status Report

After working on an update for this deal for almost two weeks, it has become clear that this entire situation now boils down to the FCC's determination to establish its authority, as has been discussed in several recent entries. The mounting involvement of politicians, state attorneys general, intervenors, etc. may be unprecedented at this stage of a major license transfer review, but it is by no means surprising or worth detailing each intervenor's position or motivation at this point. That the FCC review has become politicized is a given. It was anticipated from day one and even well before the formal merger announcement. The only issue remaining is the type and significance of conditions which the FCC is virtually assured of imposing on the license transfer.
With this being the case, it is also not surprising that SIRI CEO Mel Karmazin issued public statements this week indicating that the companies would consider terminating the transaction if the FCC conditions are deemed too severe. This must be perceived as an indication that discussions between the regulator, the companies, and third parties have reached the point where approval under the companies' terms is tenuous, at best.

    There is simply no way to determine or predict how the companies' or the intervenors' actions during this final stage will influence the FCC's decision. It is presumed that both spectrum divestiture (or lease) and interoperable device conditions are now being openly discussed among the parties as potential conditions, in addition to the a la carte pricing offered by the companies. It is also presumed that the first two issues are precisely what Mr. Karmazin is referring to in his "harsh" conditions comments. Therefore, the specter of one or both of the first two conditions (spectrum/interoperability) will ultimately determine if the companies are to successfully complete this transaction.

    It will be stated again that this publication continues to perceive this merger as arguably the defining moment for the current and future FCC. Any approval that fails to enforce the FCC's authority via significant conditions beyond those proposed by the companies will effectively result in the FCC being labeled a "rubber stamp" regulator for years to come -- at least with respect to major license transfers.

    It is therefore anticipated that the FCC will indeed approve the license transfer, but will impose conditions which will force the companies to either submit to unwillingly or to reconsidering the combination altogether. The odds are now perceived to be evenly split on this perceived outcome and there is, unfortunately no real sense of timing with respect to an FCC decision.

Grey Wolf, Inc. (GW) - Basic Energy Services (BAS)
May 14, 2008 (10:00a) - Preliminary Proxy Statement Filed

The companies filed a joint initial proxy statement for this transaction, under the name "Horsepower Holdings", with the SEC yesterday (5/13).

    The regulatory matters section of the document discloses HSR consent only, with respect to competition-related regulatory conditions. The HSR notification date is not provided, although the proxy offers an unspecified date in May for the filing.

    It is highly likely that the HSR notification will be filed this week, so approval via early termination or expiration can be anticipated by the second week of June.

    The relatively quick first proxy statement is definitely a positive development for this transaction in terms of timing, particularly given the uncertain nature of proxy reviews in the energy sector. As discussed previously (and in most similar deals), the SEC can be extremely unpredictable in energy merger, with some proxy reviews exceeding three months in length simply due to the staff assigned to any given case. The fairly rapid filing for this deal's proxy will hopefully serve to prevent any such delays for this transaction.

    The current closing expectation is late-July / early-August for this deal, assuming SEC clearance in less than 60 days.

The TriZetto Group (TZIX) - Apax Partners
May 14, 2008 (9:10a) - Preliminary Proxy Statement Filed

TZIX filed the initial proxy statement for this transaction with the SEC on May 12, 2008.

    There are no other regulatory requirements outside of HSR (early termination on 4/28) and SEC clearance. The proxy review for this deal is not anticipated to exceed 60 days and will very likely end before the end of next month, allowing the TZIX shareholder meeting and close to occur in a late-July / early-August time frame.

    At this point in the transaction there have been absolutely no negative developments with respect to the deal's financing. This is, of course, subject to change without notice as has been witnessed routinely over the last year. For the time being, the close of this transaction appears to be in no danger of delays or restructuring due to financing problems.

NAVTEQ Corp. (NVT) - Nokia Corp. (NOK)
May 14, 2008 (8:45a) - European Commission Approves Tele Atlas/TomTom Transaction

The EC has conditionally approved TomTom's acquisition of Tele Atlas.
    The official release states the following in relation to this transaction:

        "Tom Tom provides navigation software and PNDs, where it is the market leader in the EEA. Tele Atlas is one of two providers of navigable digital maps offering a complete coverage of Europe and North America. Navigable digital maps are essential inputs for PNDs.

        "The Commission's in-depth investigation assessed whether the vertical integration of Tele Atlas into TomTom would lead to a significant impediment of competition within the EEA, in particular in the light of the duopoly market for navigable digital maps (Tele Atlas and Navteq) and TomTom's strong position on the market for PNDs.

        "On the basis of its in-depth investigation, the Commission found that the merged company would be unlikely to pursue these strategies because its ability to restrict access to digital maps for other PND manufacturers would be limited by the presence of an upstream competitor, Navteq. In addition, the merged company would have no incentive to restrict access to digital maps because the sales of digital maps lost by Tele Atlas would not be compensated by additional sales of PNDs. The Commission's analysis also took into account the efficiencies that are likely to be generated by the proposed transaction. As a result, the Commission concluded that the proposed concentration would not raise competition concerns."

    Although the EC does not refer specifically to the NVT-NOK transaction, it is quite obvious that both deals have been considered in reaching today's conclusion. This will effectively allow the current proposed merger to proceed without major delays and/or significant conditions.

    European Commission approval is currently expected within the next four to six weeks for this deal.