Liberty scraps Sirius-XM merger scheme
March 14, 2014
By Chris Forrester
Liberty Media has withdrawn its plan to merge with Sirius-XM.
The news emerged after the US markets closed on March 13th. In an announcement, Liberty stated: “We are creating two new tracking stocks, Liberty Media and Liberty Broadband. We expect to complete the creation of the new tracking stocks by Q3.”
Liberty Media says it looks forward to further discussions with Sirius-XM’s special committee looking after the proposed merger/sale, which suggests the deal might be resurrected.
In typically complex undertakings, the new business structure has Liberty Broadband comprising Liberty’s stake in Charter Communications as well as its holdings in Time Warner Cable and Liberty subsidiary, TruePosition. Each Liberty shareholder would receive one share of the Liberty Media Group tracking stock and four shares of the Liberty Broadband Group tracking stock for each A or B series share of Liberty Media common stock. In addition to these tracking shares, the Liberty common stockholders would receive one subscription right for each five shares of Liberty common stock.
These subscription rights allow the holders to buy shares at a 20 per cent discount to the average price of Liberty Broadband Group in its first twenty days of trading, and the rights would expire after forty working days.
The Liberty Media Group would comprise all the other assets of Liberty Media including its Sirius-XM holdings, Live Nation, Atlanta Braves and Barnes & Noble bookstores. The new structured Liberty Media would – in terms of overall value – see Sirius-XM (in which Liberty owns 53 per cent of Sirius-XM’s equity) as being worth about 80 per cent of LM’s value.