Malone's Liberty Media offers to buy out minority stakeholders of Sirius XM

January 3
9:14 PM 2014

Liberty Media Corp, the company of cable billionaire John Malone, said it would give an all-stock buyout offer to the minority stakeholders of Sirius XM Holdings Inc, a satellite radio provider, Reuters reported. The offer would be about 3% higher than the stock's value when it closed on Friday, January 3, 2013.

The offer could be valued at over $10 billion since minority shareholders own an estimated 46% of the firm. The market capitalization of Sirius XM is pegged at $21.5 billion. According to Liberty, each share of Sirius common stock would be turned to 0.0760 of a new share of the Series C common stock of Liberty, which is equal to $3.68 per share. This is only slightly higher than the $3.57 closing price of Sirius XM on Friday, the report said.

Liberty Chief Executive Officer Greg Maffei said that Sirius XM would be creating a special committee to evaluate the offer. He added that the company could negotiate for a higher price. Liberty added that if the deal is closed, the public shareholders of Sirius XM would hold around 39% of the outstanding common stock of Liberty.

Liberty Media held a majority stake in the satellite radio operator after US regulatory authorities gave its approval to take control of Sirius XM in January last year. Liberty became the biggest shareholder in Sirius in 2009 after it provided a loan worth $530 million to the satellite radio operator so it could avoid bankruptcy. Under the terms of that agreement, Liberty would have the option to convert the loan to preferred shares, the report said.

Five years later, the cash strapped firm that Liberty rescued is in much better shape. During that time period, Sirius saw its shares rise to over 2,600%. It has also established a foothold in the vehicles market as its radios are now found in 70% of new vehicles in the US, the report said.

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