John Malone‘s company proposes a stock swap that would value Sirius XM at $3.68 a share — a mere 3% premium over Friday’s closing price of $3.57. Liberty Media already owns more than 52% of the satellite radio company’s shares, so this wouldn’t change control, and it says that it won’t squeeze out other investors. It will only go ahead if a special committee of independent directors, and other shareholders, support the change. They likely would insist on a higher price. The goal is to “simplify the capital structure and pursue other economic opportunities,” Liberty CEO Greg Maffei says. The company also says that Sirius XM shareholders will benefit by ending up with 39% of Liberty, though their shares would not entitle them to vote on its affairs.
“We believe the combined company will have better access to capital and all of Liberty’s shareholders — both its current shareholders and the Sirius shareholders who become Liberty shareholders as a result of the proposed transaction — will enjoy enhanced liquidity as shareholders of a $27 billion market capitalization company,” Maffei says. Malone adds that a deal “will enable us to focus our energies on the pursuit of new opportunities across the expanded portfolio of Liberty’s businesses.” Everything that Malone does has to be seen in the context of his eagerness to help Charter Communications (where Liberty’s the biggest shareholder) buy Time Warner Cable. “There are lots of ways that something can occur there,” Maffei says. “It’s likely that (a potential deal for TWC) would close significantly later than the transaction contemplated here.”
Here’s Liberty’s announcement: (more…)