Megaphone: DEIX Biggest winner in Merger:
As time runs out for the DOJ to announce its decision on the pending merger of Sirius and XM Satellite analyst and investors alike anxiously awaited the final decision. Those in favor of and those opposed are weighing in on their opinions in a final flurry of news releases and board postings. But just who is the likely winner once the dust settles?
I'd have to say that the real winner in all this merger mania of Sirius and XM is neither Sirius ( SIRI ) or XM Satellite ( XMSR ) but rather a much smaller and overlooked company " Directed Electronics ( DEIX)" and its shareholders. What, you say? Now how would one figure that?
In an earlier article this writer suggested that the way to play the merger was by investing in Directed Electronics. It appeared to me the stock of Directed Electronics had taken a very undeserved hit when the news was first released about the possible SIRI / XM merger and that the final news of the merger would only benefit Directed Electronics no matter which way the DOJ ruled.
Directed Electronics has many different parts to its business from Home Entertainment Audio (Polk Audio) to Automotive After-market Security and Audio Add-ons (Viper, Python, and Clifford) just to name a few. And of course they have an agreement to market the Sirius product lines. This is where the merger announcement comes into play. Apparently it is believed that Directed Electronics could lose or at least have a harder time in any future negotiations with Sirius if there is a merger. And while this may in fact be the case, the stock of Directed Electronics ( DEIX) was trading about $9.50 when the merger news was announced and had fallen to an unbelievable price of .99 before starting a rebound.
It does appear however that some investors are starting to think "outside the merger box" and have started taking positions in the shares of Directed Electronics. The company and its shareholders saw the shares of DEIX tack on about 73% over the last 10 trading sessions on above average volume.
While the opinions vary greatly about what and when the DOJ will announce its decision, there is one common factor that seem to be appearing from both sides of the street. The share price of both companies have little upside from current levels if the merger is approved and the downside could be substantial if the DOJ rules against this merger.
In my opinion Directed Electronics and its investors will be the clear winners in all this. The company is the leader in Home Audio and Automobile Security with a powerhouse of brand names that has been recognized as leaders in their field for years.
I have no opinion on the benefits or perils of the pending merger with Sirius and XM Satellite. If the merger is approved I would be the first to say, "The King Is Dead,,,,,Long Live the King !" But I will be looking at Directed Electronics to continue its quiet upward movement as its investors cheer from the sidelines.
AI
