XM Satellite Radio Holdings Inc. and Starbucks Corp. have ended a marketing pact that included music promotions in the coffee chain's stores and CD's sold with both companies' logos.
Both companies said the decision to end the pact was mutual, without explaining why. Starbucks and XM began their marketing deal in October 2004.
To get out of the deal, XM issued about 1.85 million shares worth about $22 million to the Seattle-based coffee retailer, XM said Monday in a regulatory filing.
Starbucks has the right to sell those shares, which represent less than 1 percent of XM's total 314.2 million shares outstanding at the end of September.
If Starbucks does not generate $22 million from the stock sale, XM said it may be forced to issue more shares to Starbucks or pay the difference in cash.
XM, which is being bought by rival Sirius, also said it will continue to broadcast a channel carrying the Starbucks brand for a limited time. "It's not going to be removed from our lineup immediately," XM spokesman Chance Patterson said.
Starbucks said the channel, which used to be Starbucks Entertainment Channel on XM channel 75, has been renamed Starbucks XM Cafe and is on XM channel 45.
"This partnership has been beneficial to both XM and Starbucks in terms of extending outreach as a music and entertainment brand. We just made a decision to allocate our resources toward other initiatives," Patterson said.
In an e-mailed statement, Starbucks spokeswoman Bridget Baker said the company's goal has been to "transform the way music is discovered and acquired and help both established and emerging artists reach the widest audience possible.
"As we evaluate our marketing partnerships, Starbucks Entertainment will continue to partner with like-minded organizations to best help our customers discover and acquire great music."
XM shares slid $1.03 cents, or 8 percent, to $11.72 in early afternoon trading. In the past year, the stock has ranged from $10.37 to $17.70.
Sirius Satellite Radio Inc., a smaller rival based in New York, plans to acquire XM, headquartered in Washington, D.C. The deal still requires regulatory approval.
Starbucks shares added 25 cents, or 1.4 percent, to $18.36. The stock has traded between $18.00 and 36.61 over the past year.