Newspaper article International New York Times

Liberty Media Makes Bid for Full Ownership of Sirius ; Push for Remaining 48% of Satellite Radio Provider Caps Savvy Business Deal

Newspaper article International New York Times

Liberty Media Makes Bid for Full Ownership of Sirius ; Push for Remaining 48% of Satellite Radio Provider Caps Savvy Business Deal

Article excerpt

The complex deal would be a capstone to what has already proved to be one of the savviest media deals in recent years.

Liberty Media already controls Sirius XM. Now, it wants to own the entire company.

On Friday, Liberty proposed to acquire the 48 percent of Sirius it does not already own in an all-stock deal valued at more than $10 billion, making the satellite radio provider a subsidiary of the media conglomerate.

The complex deal would be a capstone to what has already proved to be one of the savviest media deals in recent years, and is just the kind of financial engineering that has come to define Liberty and its chairman, John C. Malone.

In the depths of the financial crisis, Liberty made a multimillion-dollar loan to Sirius in exchange for a large equity stake. In recent years, Liberty has increased that position, and in 2012 took control of the company, forcing out its former chief executive, Mel Karmazin.

Along the way, the value of Sirius skyrocketed, making Liberty's initial investment of less than $1 billion worth more than $10 billion today. With the proposal to take full control, Liberty could soon be the sole owner of a company valued at $21.5 billion.

Under the proposed deal, Sirius stock would be converted into new class C shares of Liberty stock. The class C shares would then be distributed to existing Liberty shareholders on a two-to-one basis. Once completed, Sirius's public shareholders would own about 39 percent of outstanding common stock of Liberty Media.

"This is not a change of control," Liberty's chief executive, Greg Maffei, said in a call with analysts. "We already control Sirius XM."

Mr. Maffei said the deal would simplify Liberty's capital structure and clear up any questions about its commitment to Sirius XM. The deal would also increase the financial flexibility of both companies, freeing them to pursue other deals, he said.

"We think we're offering them premium," Mr. Maffei said in an interview. "And we think these C shares will be far more liquid than the Sirius shares. …

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