Liberty Entertainment Shareholders Approve Split-Off & Merger

11/19/2009 2:26 PM ET

(RTTNews) - Liberty Media Corp. (LCAPA: News ,LCAPB: News ,LINTA: News ,LINTB: News , LMDIB) said Thursday that Liberty Entertainment Group (LMDIA: News ) stockholders in a special shareholders meeting approved the split-off from Liberty Media and merger with The DirecTV Group, Inc. (DTV: News ).

Liberty Media will buy-back 90% of the outstanding shares of Liberty Entertainment common stock in exchange for all of the outstanding shares of common stock of the DTV business Combination or LEI on November 19, assuming all other conditions to the Split-Off and the DTV Business Combination are satisfied or waived.

According to the deal, the parent company Liberty Media of Liberty Entertainment will buy-back 0.9 of each outstanding share of Liberty Entertainment common stock for 0.9 of a share of the corresponding series of common stock of LEI.

In May, Digital television entertainment service provider, DirecTV had agreed to merge with Liberty Entertainment. The new entity on completion of the deal will form a separate company called DirecTV.

Further, according to the merger deal, the new company formed as a result of the merger and spin-off, will hold around 54% stake of DirecTV and at least 65% interest in Game Show Network and FUN Technologies. The company will also have around $30 million in cash and around $2 billion in debt. DirecTV had also agreed to pay around $650 million of Liberty Loans, as part of the deal. Liberty Sports Holdings, which owns three regional sports networks, will also be part of the new company.

Immediately after the completion of the Split-Off, the companies will complete the DTV Business Combination and each of LEI and DirecTV will become wholly owned subsidiaries of DirectTV.

The parent company Liberty Media of Liberty Entertainment also intends to complete the redesignation of the Liberty Entertainment common stock as Liberty Starz common stock immediately following the completion of the DTV Business Combination on November 19.

According to the the DIRECTV Business Combination transaction deal, Series B common shares of LEI held by John Malone, Chairman of the Boards of Liberty Media and certain related persons, which will be exchanged for shares of DirectTV's Class B common stock which entitles the holder to 15 votes per share and to certain limited consent rights.

All other shares of LEI common stock will be exchanged for shares of DirectTV's Class A common stock which entitles the shareholder one vote per share, according to the deal.