How many shares does Liberty Media (NASDAQ:LMCA) need? That is the question circling the Internet and filling my inbox. There are folks that can't wait for Liberty to get control, and those that want more dilution to keep Liberty at bay as long as possible. It is a classic case of different investors with different goals debating about minute details in hopes that in some way their stance will be correct.
The debate about how many shares Liberty Media needs has several answers. It is not cut and dry. For example, if Liberty converted all of its preferred, the 7% convertible notes, and got the shares delivered from the second forward purchase contract, it would indeed have over 50% of the voting shares. HUH??? That's right. The key is in the words "voting shares".
If Liberty has a desire to conduct a reverse Morris trust, they could also already have the shares they need already. The requirement for a Reverse Morris Trust is merging a larger entity into a smaller one with the smaller one being the surviving entity. For Example, if Liberty combined its SiriusXM (NASDAQ:SIRI) stake with it s Live Nation stake, it would represent a larger entity than SiriusXM.
Confused yet? Good, because it gets even more complicated.
If Liberty want de jure control, it needs to have over 50% of the shares outstanding ANS account for options shares like those tied to employees. Liberty needs the permission of the FCC to make this move. They can not go over 50% by this method until the FCC blesses the transaction. In this situation it could mean that Liberty would have to approach 54% to offset options shares, etc.
While all of this debate is entertaining, it does not change the fact that Liberty is marching toward de facto control and will eventually get it. Further, the company will be able to accomplish its goals without going the route of a tender offer, a scary prospect considering that over the past week Liberty has been able to amass and additional 66 million shares without even moving the needle on the stock price. This is actually amazing when you factor in how NASDAQ counts volume.
Additional details on this subject will be outlined for SiriusBuzz Premium members, the place where technical updates and detailed analysis are found. The bottom line is that Liberty Media is getting pretty close to having what it needs, and once again SiriusXM investors find themselves waiting on the FCC!