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Liberty Media Corporation - Series A Liberty SiriusXM (NASDAQ:LSXMA) shares are trading higher by around 5% after the company announced it proposed a business combination with Sirius XM Holdings Inc (NASDAQ:SIRI).
Liberty proposed to SIRI's Special Committee of the Board of Directors to combine and form a new consolidated public company.
As per the terms, Liberty plans to separate LSXM through a redemptive split-off of a newly formed subsidiary of Liberty (SplitCo).
The holders of each LSXM shares series will get several shares of a single series of SplitCo. This will be based on each underlying share of SIRI stock held by SplitCo that is being exchanged for 1.05 shares of the new company shares.
After this, Liberty plans to combine SplitCo with SIRI to create a new firm.
Based on recent outstanding share counts, holders of LSXM common stock would receive 10.3 shares of New SiriusXM common stock for each share of LSXM common stock held at closing, and, based on the projected outstanding principal amount of LSXM net debt at year end, the minority shareholders of SiriusXM would receive 1 share of New SiriusXM common stock plus $0.55 in cash for each share of SiriusXM common stock held at closing.
The minority shareholders of SiriusXM would collectively own approximately 16% of New SiriusXM, and the former holders of LSXM common stock would collectively own about 84% of New SiriusXM.
The transaction is expected to be tax-free and subject to the negotiation and execution of mutually acceptable definitive transaction documents and applicable board approvals.
"Liberty's proposal rationalizes the dual corporate structure between LSXM and SiriusXM and provides value to all shareholders with a more flexible and attractive currency in New SiriusXM. SiriusXM minority shareholders will also benefit from enhanced trading dynamics, including increased liquidity and likelihood of future index inclusion," stated Greg Maffei, Liberty President & CEO.
SiriusXM said the Special Committee, together with its advisors, is evaluating the proposal.
Price Action: LSXMA shares are up 5% at $23.77 on the last check Tuesday.
