Liberty Media Proposes Merger With SiriusXM

Liberty Media Corporation proposed merging its Liberty SiriusXM tracking stock group with SiriusXM, a move that would create a new public company, the companies announced Tuesday.

The proposal would split Liberty’s SiriusXM tracking stock into a newly formed subsidiary, which would combine with SiriusXM to form a new publicly traded company. Liberty currently owns an 83% stake in SiriusXM.

Tracking stocks are a type of common stock that that tracks the performance of a company's business unit. John Malone's Liberty Media holds tracking stocks for each of its three businesses: Liberty SiriusXM Group, Formula One Group and Liberty Live Group.

If approved by SiriusXM's special committee of independent board directors, shareholders of Liberty SiriusXM tracking stock and SiriusXM common stock would hold a single class of common stock in the combined company. Former tracking stockholders would own about 84% of the new company while minority shareholders in SiriusXM would hold about 16% of the new company. SiriusXM said it is “evaluating the proposal.”

SiriusXM’s shares were down 0.12%, while the tracking stock, under the symbol LSXM, rose 6.66%.

“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,” Greg Maffei, president and chief executive officer of Liberty Media, said in the statement.

“This simplified structure will also allow management to better focus on its strategic priorities, drive the company’s continued growth and simplify the investor relations story,” Maffei’s statement concluded.

The proposed transaction is structured to be tax-free, except for any cash received, Liberty Media said. The deal's structure is known as a Reverse Morris Trust, which allows a company to spin off assets and sell them without paying taxes on any gains.