Liberty Media Now Controls 56% of SiriusXM
The ownership of Liberty Media in SiriusXM has been able to increase even while the company sold shares back to SiriusXM. This happened because SiriusXM is in the midst of a share buyback program that has the company buying up shares in both the open market as well as private agreements. SiriusXM’s stock has been in a funk ever since early this year when Liberty floated a buyout offer that the media giant ultimately pulled off of the table. Previously Liberty Media ownership in SiriusXM was at the 53% level.
If Liberty Media does not participate in the $2 billion in share buybacks that SiriusXM recently announced, the company could be looking at an ownership level in the neighborhood of 60%. If there was ever any question about who really controls SiriusXM, there should no longer be a doubt. One interesting concept is that Liberty has even more ability to garner cash from SiriusXM share buybacks without being in danger of falling below 50% interest in the company.
In my opinion the confidence of Liberty Media in SiriusXM will be illustrated in whether or not the company decides to sell any of its stake in the new buyback plan. If Liberty sells but remains above 50% then they will be demonstrating a desire to maintain control. If Liberty does not participate, then they may have interests in making another potential run at complete control.
Liberty’s recent spin-offs cleans up the equity for a potential offer at some point down the road. The last time SiriusXM and Liberty did a deal to buy back shares from Liberty, Liberty received the better bargain with a guaranteed price above that which the equity was trading at when the deal was finalized. It was frustrating for SiriusXM shareholders to see the company paying a premium. The fact that Liberty was actually able to increase ownership levels as well as obtain a premium throws a little salt in the wounds.
The next few quarters will be interesting to watch. Investors will want to pay attention to Liberty Media’s stock price as well as SiriusXM’s. In addition, investors will want to pay close attention to any share buying deals between Liberty and SiriusXM. I was a proponent of the original Liberty offer that was on the table in January of this year. I would likely be a fan of another deal should it arise.
they will be back with another offer once the spin off is complete and they will walk away with the company this time. I could not be happier. LMCA shares at around 50 bucks maybe by the end of the year. Anywhere between 11-12 of my shares of sirius for one of them or the C class and i am SOLD
Spencer,
They said at the call that they wouldn’t think about selling even if SIRI were $10/s. They aren’t saying SIRI is worth that amount or going that high. They are basically saying “we’re in control, and you better get used to it because we’re sticking around.” It is only a matter of time before they have the whole thing. The only question is…do they make an offer, or do they let SIRI buy back the rest of the float? I don’t think Sirius shareholders will have much to look forward to in terms of organic gains. Being one, I am only hoping to at least come close to recent highs before exiting my EOY options position. Will then hold onto SIRI shares and let them fold into Liberty, and with whatever I have in selling options (if anything at all by that point), will maybe look at initiating a position in Liberty. We’ll see…
Spencer,
There is no doubt in my mind whatsover that liberty will seel 100% of its high basis siri shares back to siri. This is about 600M shares. All the need is the price to come up to the lever of $4 or higher.
To think that we can separate new lmca (without spun off cable assets)from sirius xm is not wise, in mild terms. The companies are attached at the hip. LMCA cannot perform well without siri performing well. This is why shareholders of both compnies will do very well.