Billionaire John Malone’s Liberty Media announced late Friday a proposal to turn Sirius XM Radio into a wholly-owned subsidiary by creating a third class of Liberty Media shares. Liberty already owns a controlling stake in Sirius XM, but would take full ownership in the potential deal.
Shareholders of Sirius XM would convert their common stock into 0.076 of a new share of Liberty, immediately following a 2:1 distribution of a new Liberty Series C common stock to all Series A and B shareholders. The proposed exchange ratio values Sirius shares at approximately $3.68 per share based on Friday closing prices of Liberty’s Series A shares.
“Sirius shareholders will continue to participate in Sirius’ future prospects along with Liberty’s broader portfolio of businesses and opportunities,” Liberty CEO Greg Maffei said in a statement. ”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.”
“The proposed transaction is an important step in the growth of both companies,” added Malone, Liberty’s chairman. “It will enable us to focus our energies on the pursuit of new opportunities across the expanded portfolio of Liberty’s businesses and to optimize our capital structure to produce the maximum possible returns to all shareholders.”
Malone and Liberty took majority ownership of Sirius XM last January, after months spent trying to gain control. The Federal Communications Commission gave Liberty permission to do so.
The $3.68 per share is only a 3% premium on Sirius XM’s $3.57 closing price on Friday.