SiriusXM shares are down about 2.4% to $3.29 in post-market trading after Liberty Media said it will sit tight with its 53% stake in the satellite radio company while it reshuffles its asset portfolio — potentially to help Charter Communications expand. “We are creating two new tracking stocks, Liberty Media and Liberty Broadband,” CEO Greg Maffei says. With the new plan, “our offer for SiriusXM is no longer applicable” although there could be further discussions about it. “We remain enthusiastic owners” of a majority stake in the satellite broadcaster. Liberty offered in early January to buy the stock in SiriusXM that it didn’t own for $3.68 a share — a mere 3% premium over the price before the announcement. SiriusXM directors named a special committee to assess the plan and ensure that it didn’t shortchange other shareholders.
In the new stock plan, Liberty will reclassify its current securities and give owners one share of the new Liberty Media and four shares of Liberty Broadband. The Broadband stock will represent the company’s interests in Charter Communications, Time Warner Cable, and location determination firm TruePosition. Investors also will have a subscription right giving them 40 trading days to buy at a 20% discount an additional share in Liberty Broadband for every five that they own. That cash will go to the cable-focused entity and “provides us greater flexibility to, among other things, support Charter in its expansion efforts,” Liberty Chairman John Malone says. Charter’s effort to buy Time Warner Cable was thwarted after Comcast came in with a higher offer of $45.2B. Since then, CEO Tom Rutledge has said that he’s still interested in acquisitions although he doesn’t feel compelled to make one.