Liberty Media has proposed a merger with SiriusXM that would consolidate the operations of the two companies.
The deal as structured would see Liberty spin-off its LSXM tracking stock that currently owns over 80% of SiriusXM and then combined with the company itself with Liberty’s shareholders receiving a number of shares of a single series of common stock of SplitCo calculated based upon each underlying share of SiriusXM common stock held by SplitCo being exchanged for 1.05 shares of common stock of New SiriusXM. Current SiriusXM shareholders would receive 1 share of the new company for each share they currently hold plus a cash payment.
Liberty explains the deal using their current outstanding share counts and projected outstanding principal that each share of LSXM common stock would be exchanged for 10.3 shares in the new company and the current minority shareholders of SiriusXM would receive one share and 55 cents for each of their shares. Liberty would own 84% of the new company with the minority shareholders holding the other 16%.
Liberty President/CEO Greg Maffei stated in a press release, “Liberty’s proposal rationalizes the dual corporate structure between LSXM and SiriusXM and provides value to all shareholders with a more flexible and attractive currency in New SiriusXM. SiriusXM minority shareholders will also benefit from enhanced trading dynamics, including increased liquidity and likelihood of future index inclusion. We are excited about the prospects for New SiriusXM and look forward to remaining meaningfully invested in the business. This simplified structure will also allow management to better focus on its strategic priorities, drive the company’s continued growth and simplify the investor relations story.”
SiriusXM released a follow-up statement stating, “The Special Committee, together with its advisors, Solomon Partners Securities, LLC and Debevoise & Plimpton LLP, is evaluating the Proposal. There can be no assurance that the Proposal, or any other transaction, will be completed or, if so, as to the terms and conditions of any such transaction. The Company does not intend to disclose developments with respect to this matter until such time as the Special Committee and the Company’s board of directors approves a transaction or the Special Committee otherwise deems further disclosure appropriate, except as required by law or other regulatory requirements.”
Liberty says the proposed transaction is intended to be tax-free (except with respect to any cash received) and would be subject to, among other things, the negotiation and execution of mutually acceptable definitive transaction documents and applicable board approvals, including the approval of a Special Committee.
