Liberty Media pulls Sirius XM bid, creates tracking stocks

Thu Mar 13, 2014 8:09pm EDT

Liberty Media Corp. chairman John Malone arrives at the annual Allen and Co. conference at the Sun Valley, Idaho Resort July 12, 2013. REUTERS/Rick Wilking

Liberty Media Corp. chairman John Malone arrives at the annual Allen and Co. conference at the Sun Valley, Idaho Resort July 12, 2013.

Credit: Reuters/Rick Wilking

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(Reuters) - Liberty Media Corp (LMCA.O), controlled by chairman John Malone, said it was no longer making an offer to buy all of Sirius XM shares and announced plans to split its media holding company into two tracking stocks later this year.

Malone, famous for complicated stock structures, plans to divvy up its cable and media assets into two new stocks, Liberty Broadband Group and Liberty Media Group. In recent years, Malone has created several tracking stocks across his various portfolios. Tracking stocks provide exposure to the operating performance of a unit of a larger company.

Investors appeared to like the move late Thursday and pushed Liberty Media shares up 3 percent in after-market trading.

Liberty, which offered to buy out minority shareholders in satellite radio provider Sirius XM for a low premium in January in a deal worth more than $10 billion, also said the "offer for Sirius XM is no longer applicable."

But it was unclear whether Liberty Media was going to abandon that plan all together because Liberty Media Chief Executive Officer Greg Maffei added that Liberty will continue discuss the matter with Sirius XM's special committee of board members who had been studying the offer.

A Sirius XM spokesman declined to comment while a Liberty spokeswoman could not be reached.

Liberty also said in a press release it plans to sell some Sirius XM shares but said "we remain enthusiastic owners" of the company.

Maxim Group analyst John Tinker said that Liberty will likely keep boosting its stake in Sirius XM and could benefit from future share buybacks. He said Liberty's moves made sense because it no longer needs Sirius XM's balance sheet to help fund a large acquisition. Liberty has been helping Charter pursue Time Warner Cable for about nine months.

"Liberty doesn't need to buy all of Sirius XM right now. When they were buying Time Warner Cable, they needed it and now they don't and it's not worth the cost," Tinker said.

Sirius XM shares fell 2.7 percent in after-hours trading.

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Liberty Broadband Group will house Liberty's investments in Charter Communications (CHTR.O), Time Warner Cable (TWC.N) and location technology company True Position Technologies Inc.

Liberty, which owns a 27 percent of Charter, had been backing the cable provider's bid for larger rival Time Warner Cable (TWC.N) but lost out to the much larger Comcast for the asset in February. It owns a 3 percent stake in Time Warner Cable.

Liberty said the new stock structure will provide the company with more flexibility to "support Charter in its expansion efforts."

Liberty Media Group, the other tracking stock, will be composed of Liberty's 53 percent investment in Sirius XM Holdings Inc (SIRI.O) and other media assets such as investments in Live Nation Entertainment Inc (LYV.N) and the Atlanta Braves baseball team.

Current Liberty Media investors will receive one share of Liberty Media Group and four shares of Liberty Broadband Group as well as rights to acquire more of the cable stock.

(Reporting by Liana B. Baker; Editing by Amanda Kwan and Cynthia Osterman)

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