Boston, MA 03/14/2014 (wallstreetpr) – Liberty Media Corp (NASDAQ:LMCA) announcement that acquisition of Sirius XM Holdings Inc. (NASDAQ:SIRI) was no longer application. The company had been working on a proposal to wholly takeover the company in which it already owns the majority stake. So then, what was it that led to the other to the point that Liberty Media opted out of possible deal?
First, the proposal to acquire the whole of Sirius XM was something that didn’t go down well with shareholders in the satellite radio service company. The shareholders looked at the proposal and thought it was not necessary because it valued the company too low.
In its calculation, Liberty Media Corp (NASDAQ:LMCA) was considering offering Sirius XM $3.68 per share, a move that would value the satellite radio provider at roughly $23 billion.
Currently Sirius has the largest pay-radio service which boasts more than 25.6 million subscribers. The company has of late been inking deal in the connected vehicle sector. It seems to believe that taking its radio service to new and used vehicles would effectively bolster its performance. Currently, Liberty Media Corp (NASDAQ:LMCA) owns 53 percent stake in the satellite radio provider.
In the current session, shares of Liberty Media Corp (NASDAQ:LMCA) were trading at $135.45, up 7.38 percent at 11 a.m. EDT., on the back of more than double the normal shares volume changing hands. Excitement in the stock increased with the announcement of plans to create two tracking stocks instead of going after Sirius.
Tracking stocks
Liberty Media Corp (NASDAQ:LMCA) considers creating of two tracking stocks as the best shot towards improving shareholder value, offering greater choice to investors and taking the company’s growth to the next level.
Creating tracking stock effectively means that Liberty Media Corp (NASDAQ:LMCA) will change its structure. In that manner, the company will create Liberty Broadband Group and Liberty Media Group, to which it will attribute its assets.
Liberty Media will contain assets including the majority investment in Sirius XM and other assets. On the other hand, Liberty Broadband will contain interest in Time Warner Cable, TruePosition and Charter Communications. The company’s chief executive Greg Maffei stated that they hope to final the tracking stocks creation process by the third quarter.
New shares distribution
Now that Liberty Media Corp (NASDAQ:LMCA) has given up plans to acquire the entire of Sirius XM because of the more attractive tracking stock business, it has announced how shares in the tracking stocks will be distributed to the current stockholders.
In that case, for each of the Series A and B of Liberty common stock, four shares and one share of Liberty Broadband and Liberty Media will be allocated respectively.
