Liberty Media Corp. (LSXMK) announced on Tuesday that it has communicated a proposal to Sirius XM Holdings Inc. (SIRI), an audio entertainment company, to combine Liberty SiriusXM tracking stock group or LSXM with SiriusXM. This would create a new consolidated public company, New SiriusXM.
As per the terms of the proposal, Liberty would separate LSXM by means of a redemptive split-off to form SplitCo which would own all the assets and liabilities of LSXM.
The common stockholders of LSXM would receive a number of shares of a single series of common stock of SplitCo, based upon each underlying share of SiriusXM common stock held by SplitCo being exchanged for 1.05 shares of common stock of New SiriusXM.
SplitCo would then combine with SiriusXM to form New SiriusXM. Minority shareholders of SiriusXM would receive shares in New SiriusXM on a one-for-one basis.
Additionally, the minority shareholders would receive a pro rata cash payment based on the amount of the outstanding net debt of LSXM effectively assumed by New SiriusXM in the proposed transaction.
Accordingly, minority shareholders of SiriusXM would own around 16 percent of New SiriusXM and shareholders of LSXM common stock would own approximately 84 percent of New SiriusXM.
The proposed transaction is intended to be tax free and would not result in changes to the Liberty Formula One tracking stock group or the Liberty Live tracking stock group.
In pre-market activity, shares of Liberty Sirius are trading at $25.34, up 11.98% and shares of Sirius XM are trading at $3.60, down 10.22% on Nasdaq.
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