Sirius XM and Liberty Media enter transaction to simplify structure of Sirius

Liberty Media (LSXMA, LSXMK, FWONA, LLYVA) and Sirius XM (SIRI) have entered into definitive agreements whereby Liberty Media’s Liberty SiriusXM tracking stock group (LSXMA, LSXMB and LSXMK), collectively LSXM, will be combined with SiriusXM to create a new public company which will continue to operate under the SiriusXM name and brand. New SiriusXM will have a single outstanding series of common stock and is expected to continue to be traded on the Nasdaq Global Select Market under the ticker symbol “SIRI”. The transaction will result in New SiriusXM being an independent public company, with no majority stockholder, a single class of shares and a board comprising a majority of independent directors. New SiriusXM will have a simplified ownership structure. The additional float provided by the transaction is also expected to improve trading liquidity for New SiriusXM stockholders. Liberty will separate LSXM by means of a redemptive split-off of a new subsidiary of Liberty, SplitCo, which will hold its shares of SiriusXM and approximately $1.7B of estimated attributed net liabilities. Holders of each series of LSXM common stock will receive a number of shares of SplitCo stock equal to the Exchange Ratio, such that LSXM stockholders receive 1 share of New SiriusXM for each share of SiriusXM previously held at LSXM, adjusted for LSXM net liabilities. A wholly owned subsidiary of SplitCo will then merge with SiriusXM, and existing SiriusXM stockholders will receive 1:1 shares of SplitCo, which will become New SiriusXM. The transaction is intended to be tax-free to LSXM stockholders and SiriusXM stockholders. Liberty Media currently holds 3,205.8 million shares of SiriusXM attributed to LSXM. If the Net Liabilities Share Adjustment and the adjusted fully diluted shares of LSXM were calculated as of June 30, 2024, the Exchange Ratio is estimated to be approximately 8.4 shares in New SiriusXM for each share of LSXM held. Pro forma for the transaction, at June 30, 2024, there will be approximately 3,392 million basic shares outstanding of New SiriusXM, of which former LSXM stockholders will own approximately 81% of New SiriusXM, with the SiriusXM minority stockholders owning the remaining 19%. SiriusXM has secured committed financing with availability of $1.1B from Morgan Stanley, Bank of America and J.P. Morgan, the net proceeds of which may be used to refinance Liberty Media’s 2.75% Exchangeable Notes due 2049 and the existing Liberty Media margin loan secured by SiriusXM’s common stock. The transaction has been unanimously approved by Liberty’s Board, the SiriusXM Special Committee and SiriusXM’s Board of Directors. Greg Maffei is expected to be Chairman of the Board of New SiriusXM. The transaction is expected to be completed early in Q3 2024, subject to approval by a majority of the aggregate voting power of the shares of Liberty SiriusXM common stock, the receipt by Liberty Media and New SiriusXM of tax opinions from their respective tax counsel, as well as the receipt of required regulatory approvals and the satisfaction of other customary closing conditions. The transaction will not result in any changes to the Liberty Formula One tracking stock group or the Liberty Live tracking stock group.