SiriusXM announced that the Special Committee of its Board has retained Evercore Group to act as its financial advisor and Weil, Gotshal & Manges to act as its legal counsel to assist and advise the Special Committee in its evaluation of John Malone’s Liberty Media’s proposal to acquire all of the outstanding shares of common stock of SiriusXM not owned by Liberty. Liberty already owns more than half of SiriusXM shares and wants gain control of the rest of Sirius XM Holdings Inc. in a stock deal that valued Sirius XM at about $23 billion when it was announced earlier this month.
The Special Committee intends to work with its financial and legal advisors toreview and evaluate whether the Liberty proposal is in the best interests of SiriusXM and its stockholders.
In addition, the Special Committee has authorized SiriusXM to postpone the completion of its planned $500 million dollar share purchase from Liberty. The previously scheduled $240 million repurchase of shares of SiriusXM common stock from Liberty Media has been deferred from from 1/27 to 4/25 (the date of the final installment of share repurchases from Liberty Media pursuant to the 10/9/13 agreement with Liberty Media, as amended). As a result of this deferral, SiriusXM will repurchase $340 million of its shares of common stock from Liberty Media on 4/25 at $3.66 per share. The effort was part of Sirius’ share repurchase program, which it announced has been increased by an additional $2 billion at the time.
Liberty Media’s proposal would make Sirius XM public shareholders would become shareholders of Liberty in a tax-free transaction in which each share of Sirius common stock would be converted into 0.0760 of a new share of Liberty Series C common stock, and, immediately prior to the conversion, Liberty intends to distribute, on a 2:1 basis, shares of Liberty’s Series C common stock to all holders of record of Liberty’s Series A and B common stock to create a liquid trading market for Liberty’s Series C common stock.
Upon the completion of the proposed transaction, Liberty expects that Sirius’ public shareholders would own 39% of Liberty’s then-outstanding common stock.
“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,” said Greg Maffei, Liberty CEO. “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.”
RBR-TVBR observation: Now is a good time to merge the two stocks to give Liberty even deeper pockets for future growth. Reportedly, the selection of Evercore could be an indication that Sirius XM will be looking for Liberty to sweeten its offer. “Brian Kraft of Evercore has been covering Sirius XM since at least 2011. Coincidentally, before the market opened on the day that Liberty made its proposal, Kraft and Evercore had issued an upgrade of Sirius XM to “overweight” from “equal weight,” noted Seeking Alpha.