The board of Sirius XM Radio Inc did not breach its duty to shareholders by allowing a takeover by Liberty Media Corp without demanding it pay a premium for the stock, a Delaware judge ruled on Friday.
John Malone's Liberty Media acquired control of the satellite radio broadcaster in January. The media holding company had loaned Sirius $530 million in rescue financing in 2009, and as part of that deal Sirius' board agreed not to adopt a poison pill or any defense measures against a Liberty takeover after a three-year standstill.
The lawsuit by Sirius stockholder City of Miami Police Relief and Pension Fund accused the Sirius board of tying its own hands and abdicating its duty to shareholders.
Leo Strine, the chief judge or chancellor on the Delaware Court of Chancery, said in his 24-page opinion that Liberty Media is entitled to the deal it struck in 2009. He also said the deal was fully disclosed and shareholders waited too long to sue.
"The plaintiffs are not entitled to watch Sirius take over half a billion dollars in capital from Liberty Media, sit on the sidelines benefitting from the investment Liberty Media made in Sirius until after the statute of limitations expires, and then belatedly seek to deprive Liberty Media of the benefits of the contract," Strine wrote.
The case is In Re Sirius XM Shareholder Litigation, Delaware Court of Chancery, No. 7800.
(Reporting by Tom Hals in Wilmington, Delaware; editing by Jim Marshall)