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Top executives at Sirius XM and Liberty Media on Tuesday defended a plan by the conglomerate to wholly absorb the satellite radio firm for $3.68 a share, a price that some investors deem too paltry.
Jim Meyer, the CEO of Sirius XM, said Tuesday that former DirecTV and Tribune CEO Eddy Hartenstein has been tapped to head a special committee to evaluate the deal.
Meyer reminded Wall Street analysts during a session Tuesday at the Citi Internet, Media and Telecommunications conference in Las Vegas that Liberty has been a stakeholder in Sirius XM for five years and that some Liberty executives are Sirius XM board members. “It works great,” he said.
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“There’s no drama here,” Meyer told attendees. “Liberty won’t do the deal — which I think, by the way is great — without the majority of the minority shareholders approving. And I think that’s all there is to say.”
Liberty CEO Greg Maffei, speaking at the same conference, said the deal would lead to “a more rational capital structure going forward.” While it would also give Liberty more access to Sirius XM’s cash flow, it doesn’t mean that Liberty is preparing to purchase another cable TV company, as has been speculated, Maffei said.
He said that eight years ago Liberty was “a complete mish-mash” because it held minority stakes in lots of companies and its tax implications were onerous, which led to the company trading at up to a 40 percent discount on Wall Street. A clean acquisition of Sirius XM makes sense and also will help the satellite radio company compete in an era where the Internet, iTunes and more are available in automobiles.
He said there is a “disconnect” because some are accusing Liberty of “stealing” Sirius XM with its offer of $3.68 per share. while some of the same people also “worry about the death of the company because of the connected car.”
Liberty’s plan, revealed last week, involves creating a Liberty Series C nonvoting stock that would be traded for Sirius XM shares. The transaction values each Sirius XM share at $3.68, which is lower than where the stock closed on Tuesday, suggesting that Wall Street thinks Liberty will have to sweeten the terms to get the deal done.
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One of those who object is shareholder Ralph Nader, the consumer advocate who has run for president on multiple occasions. On Monday, Nader blasted Liberty’s proposal as “ludicrous” and he insinuated a legal challenge.
Liberty already owns a controlling stake in Sirius XM. If it succeeds in making the satellite radio firm a wholly owned subsidiary, Sirius XM shares would presumably no longer trade separately on Nasdaq.
At the close on Tuesday, the market capitalization for Sirius XM was $23.7 billion. The stock closed fractionally higher at $3.86.
Earlier on Tuesday, Sirius XM said it added 1.66 million subscribers last year, 60,000 more than its guidance. The company ended 2013 with 25.66 million subscribers, with 21 million of those being paying subscribers.
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