Liberty Media is trying to devour all of Sirius XM in a deal that would value the satellite radio service at nearly $23 billion.
The complex proposal announced Friday would enable Liberty Media Corp. to seize full ownership of Sirius XM Holdings Inc. after it acquired a controlling interest in the company last year.
Liberty Media, an Englewood, Colo., company controlled by billionaire John Malone, owns about 53% of Sirius XM’s stock, according to a letter filed Friday with the Securities and Exchange Commission.
Under the proposal, each Sirius share would be exchanged for 0.076 shares of Liberty Media’s Series C Common stock if the bid is accepted.
Sirius XM stockholders would end up with a 39% stake in Liberty Media, whose portfolio already includes ownership of the Atlanta Braves baseball team, and stakes in cable TV and Internet service provider Charter Communications Inc., concert promoter Live Nation Entertainment Inc. and book retailer Barnes & Noble Inc.
The stock swap translates into $3.68 for each Sirius XM share, based on Friday’s closing price of Liberty Media’s stock. The bid is just 3% above Sirius XM’s Friday closing price of $3.57 per share. The stock jumped 5% to $3.75 in extended trading after the proposal was unveiled.
The offer values Sirius XM at just under $23 billion, based on company’s 6.1 billion outstanding shares as of Oct. 22. Liberty Media CEO Greg Maffei told analysts in a conference call that the deal ultimately will peg Sirius XM’s value at $27 billion because of additional shares expected to be issued under the proposal.
Maffei said Liberty Media will abandon the deal if it doesn’t win the backing of Sirius XM’s board. Sirius XM said it is forming a special committee of independent directors to consider the offer.
New York-based Sirius XM has built the world’s largest pay-radio service with 25.6 million subscribers. Despite its popularity, Sirius XM has faced numerous challenges through the years, including stiffer competition from digital radio alternatives offered by Pandora Media Inc. and Apple Inc.
Liberty Media saved Sirius XM from near bankruptcy in 2009 with a $530 million loan.