Liberty Media Seeks to Make Sirius XM a Wholly Owned Subsidiary

The proposed transaction would involve the creation of a third class of Liberty shares.

Liberty Media said late Friday it is proposing to make Sirius XM Radio a wholly owned subsidiary of the conglomerate controlled by billionaire John Malone.

Liberty already owns a controlling stake in Sirius XM, but if shareholders approve of the plan, the satellite radio firm would take full ownership and each share, or Sirius XM would be converted into 0.076 share of a new share of Liberty.

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The complicated plan also includes a 2:1 distribution of a new Liberty Series C common stock to shareholders of Series A and Series B stock.

Shares of Sirius XM closed 2 percent higher Friday at $3.57, while Liberty Media shares were up 1 percent to $145.33. Based on Friday's prices, the proposed transaction values Sirius XM stock at $3.68 per share.

After several months of acquiring shares and options, and with the permission of the FCC, Liberty took control of Sirius XM a year ago.

Malone, who is Liberty's chairman, said the deal would "enable us to focus our energies on the pursuit of new opportunities across the expanded portfolio of Liberty's businesses and to optimize our capital structure to produce the maximum possible returns to all shareholders."

STORY: Sirius XM Third-Quarter Earnings Drop, Subs Grow

Liberty CEO Greg Maffei added that the combined company would have better access to capital and that Sirius investors who become Liberty stakeholders "will enjoy enhanced liquidity as shareholders of a $27 billion market capitalization company."