If you have not had a chance to read it, Forbes brings up a pretty salient point when it comes to the SiriusXM deal. The NOL's that SiriusXM have value, but at this point the only two entities that they have value for are SiriusXM and Liberty Media. If another change in control were to happen, those NOL's essentially evaporate.
"The real prize in the deal could be Sirius's $7.7 billion in tax loss credits. Based on that alone, the deal feels like a steal. And it may be, but only for Malone. Typically, tax credits disappear when a company is acquired -- that way, the company's losses don't make it more valuable -- but because Malone already owns more than half of the company and is structuring the deal as a reorganization, Liberty gets to keep the credits. But no other acquirer would.
The tax credits are valuable to Sirius, but Sirius only makes about $500 million before taxes a year, vs. $2 billion for Liberty. So the combined entity will be able to take advantage of the tax losses much more quickly."
If you are thinking that some other entity can swoop in with an offer, think again. There is value in SiriusXM that other entities can not gain. Liberty has effectively guaranteed itself a non-competitive environment in which to negotiate. The only way to level the playing field for SiriusXM's minority holders is to force Liberty to structure the deal differently so that it is not a reorganization. That being said, the likelihood of another entity stepping in to make a play on SiriusXM has been almost zero since the day Liberty obtained over 50%.
There is likely very little that can be done to stop a takeover by Liberty at this juncture. Most any effort would have the effect of devaluing the position just after a deal is consummated. This begs the question. Would an investor be biting his nose to spite his face? An all-stock deal makes the most sense, but the focus should be on two factors.
1. The percentage of the new entity that the minority holds.
2. The rights tied to the shares of the new entity (voting rights).
Understanding, or realizing, that a deal is going t0 happen no matter what is what investors need to quickly get used to. Yes, there will be lawsuits, but they are not very likely to succeed, while at the same time draining value. If you were interested in SiriusXM as a long term investment, does it really matter if the mechanism of that investment is through a symbol called SIRI or a symbol called LMCC? If SiriusXm as a stand-alone was to venture into the cable business, would you run from your investment? What if it decided to by a telematics business for $530 million...oh yea...SiriusXM did that!
The bottom line is that investors need to grasp that there will be a deal. What needs to happen is that investors need to think now about their actions heading into that deal.