Liberty Media shares jumps as Malone drops Sirius offer

March 14 Fri Mar 14, 2014 12:27pm EDT

March 14 (Reuters) - Shares of Liberty Media Corp rose as much as 9.4 percent after the company, controlled by chairman John Malone, canceled an offer to buy the rest of satellite radio provider Sirius XM Holdings Inc.

Shares of Sirius, 53 percent owned by Liberty, rose 3.2 percent in afternoon trading after the company said on Friday it would resume its $2 billion share buyback program, which had been suspended in connection with Liberty's offer.

Buying the rest of Sirius would have beefed up Liberty's balance sheet.

That would have helped Malone finance a now-defunct bid by Charter Communications Inc, another of his companies, for Time Warner Cable Inc.

"The difficulties may have proved too much," Northland Capital Markets analyst Tom Eagan wrote in a note.

Although Liberty Media dropped its bid, it said on Thursday it was still in discussions with Sirius's independent directors.

Some analysts said Liberty could still pursue a transaction with Sirius.

Liberty said on Thursday it planned to split its cable and media holdings into two tracking stocks - Liberty Broadband Group and Liberty Media Group - later this year.

Liberty Media will own the Sirius stake, apart from other assets such as investments in Live Nation Entertainment Inc and the Atlanta Braves baseball team.

Liberty Media could ultimately merge with Sirius as a pure satellite radio entity, Wunderlich Securities analyst Matthew Harrigan said.

Barclays Equity Research analyst Kannan Venkateshwar said Liberty could also spin off its Sirius stake via a Reverse Morris Trust, a transaction that allows a parent company to sell its unit in a tax-efficient manner.

Liberty shares were up 8.5 percent at $136.82 in afternoon trading on the Nasdaq on Friday. Sirius shares were up 3.4 percent at $3.48. (Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Joyjeet Das)

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