Liberty Media has announced that it is to cancel its plan to buy out satellite radio provider SiriusXM and will instead split its shares into two new tracking stock groups.
The media giant intends to reclassify its common stock into Liberty Media…
Liberty Media has announced that it is to cancel its plan to buy out satellite radio provider SiriusXM and will instead split its shares into two new tracking stock groups.
The media giant intends to reclassify its common stock into Liberty Media Group and Liberty Broadband Group, with the latter comprising its holdings in Charter Communications and Time Warner Cable as well as its subsidiary TruePosition, a location intelligence solutions provider.
The company’s majority holding in SiriusXM is to remain part of the Liberty Media Group.
Commenting on the plan, Greg Maffei, president and CEO of Liberty, said: “This is another step in Liberty’s process of offering investors greater choice, transparency and focus. We expect to complete the creation of the new tracking stocks by the third quarter.
“In light of the tracking stock distribution, our offer for SiriusXM is no longer applicable. Depending on market conditions, we look forward to further discussions with the SiriusXM special committee. We remain enthusiastic owners of 53% of SiriusXM.”
Under the plan, the company’s shareholders would receive one share of Liberty Media tracking stock and four shares of Liberty Broadband tracking stock for each Liberty share they own.
In addition, stockholders will also receive a subscription right to acquire one additional series A or series B share of Liberty Broadband tracking stock for every five shares of Liberty Broadband tracking stock they receive in the distribution.
Cash raised from this subscription rights offering will be attributed to the Liberty Broadband Group and be used for general corporate purposes, including investment in new business opportunities.
The move represents a notable shift in strategy for Liberty over its ownership of SiriusXM. At the start of the year, the group announced a proposal to take full control of the satellite radio broadcaster in an all-share deal.
Under that tax-free transaction, Sirius’ public shareholders would have received 0.0760 of a new share of Liberty series C non-voting common stock in exchange for each share of Sirius common stock they owned.
Liberty had engaged Guggenheim Securities as its financial adviser on the offer with Baker Botts providing legal advice. The special committee of independent directors set up by SiriusXM to evaluate the proposal was being advised by Evercore Group and Weil, Gotshal & Manges LLP.
With this offer now shelved, Liberty stated that SiriusXM’s US$500m stock repurchase agreement will be resumed.
Announced in October 2013, SiriusXM initially purchased US$160m of its shares from Liberty in November.
It was then due to purchase a second tranche of shares worth US$240m on 27 January 2014, but this was postponed due to Liberty’s takeover plan.
SiriusXM will now buy back the remaining US$340m of shares from Liberty in the next few weeks.
