This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Liberty Media Seeks to Consolidate SiriusXM in $27 Billion Stock Merger

Stocks in this article: SIRI LMCA

NEW YORK (TheStreet) -- Liberty Media (LMCA) said on Friday it would seek to make SiriusXM Holdings (SIRI) a wholly-owned subsidiary of the media conglomerate.

The decision comes nearly five years after Liberty Media -- chaired byJohn Malone -- took a 40% stake in SiriusXM through a lifesaving $530 million capital infusion into the satellite radio leader. Over subsequent years, Liberty Media has increased its holding in SiriusXM as the company rebounded from the verge of bankruptcy, became profitable and generated positive cash flows. Nearly a year ago, Liberty Media built its stock ownership of SiriusXM to a controlling interest.

Now the media giant is seeking to consolidate the SiriusXM into its own finances as a wholly owned subsidiary.

The company said in a Friday press release that it would seek to convert public shares of SiriusXM into Liberty Media shares. Were a deal to be done on the terms that Liberty Media announced on Friday, current SiriusXM shareholders would own approximately 39% of Liberty Media's outstanding stock. The combined company would have a stock market capitalization of $27 billion, Liberty Media said.

Friday's deal values SiriusXM shares at $3.68 apiece, according to a press release, a modest premium to Thursday closing share prices.

"Our proposal will allow Sirius public shareholders to convert from a non-controlling stake in a subsidiary into a direct equity position in Liberty, the parent company," Greg Maffei, Liberty Media's CEO, said in a statement.

"Sirius shareholders will continue to participate in Sirius' future prospects along with Liberty's broader portfolio of businesses and opportunities. 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 added.

Friday's deal would seek to convert SiriusXM shares into Liberty Media shares on a tax-free basis.

In recent years, SiriusXM has been among the media industry's strongest performers as a recovering new and used car market bolstered sales of the firm's satellite radio subscriptions. Those rising sales have translated to strong cash flows, which many had expected could allow SiriusXM eventually to pay large dividends to its shareholders, predominately Liberty Media. In 2012, the company paid a 5 cent special dividend to shareholders and unveiled a $2 billion share buyback authorization to reduce its much diluted share count.

Liberty Media rejected analyst assertions that consolidating SiriusXM would curb the firm's share repurchase activity. Instead of SiriusXM buying back shares, the commentary indicated Liberty would simply pick up such activity. "The Sirius buyback program becomes the Liberty buyback program," the company said on a call with analysts.

With Liberty's stock deal on the table for SiriusXM minority shareholders, the satellite radio giant will need to form a special committee to evaluate the $3.68 a share consolidation proposal. Liberty also indicated they would be flexible to negotiation once the special committee forms an opinion on their offer.

An acquisition of SiriusXM and the subsequent boost of Liberty Media's market capitalization to $27 billion could also aid the company in pushing a joint bid with Charter Communications (CHTR) in buying Time Warner Cable (TWC). Liberty Media characterized Friday's proposal as a means to give the company added financial and strategic flexibility. Liberty Media openly fielded questions about Charter Communications and Time Warner Cable in their call announcing their SiriusXM proposal.

On Friday, Evercore Partners upgraded SiriusXM shares to "outperform," with a $4.50 price target, citing the company's efforts to profit from a growing marketplace for wireless connectivity within automobiles.

SiriusXM Upgraded by Evercore on Connected Car Opportunity

-- Written by Antoine Gara in New York

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs