Liberty Media's John Malone Eyes Sirius Spin-Off
CNBC.com reports that Liberty Media (NASDAQ: LMCA) Chairman John Malone is pushing for a spin-off of Sirius XM (NASDAQ: SIRI) through a process known as a tax-free Morris Trust spin. "We are involved in negotiations about whether or not or how much a control premium [to effect a deal] would need to be," Malone said.
Liberty owns a roughly 46 percent stake in SIRI, an investment which was made at the height of the financial crisis and allowed SIRI to avoid bankruptcy. CNBC reports that Liberty made the investment when SIRI was trading at 10 cents per share.
Today, the stock is trading at $2.05, representing appreciation of 1,930 percent for Liberty. One question about a spin-off is whether the Federal Communications Commission would approve such a deal. Previously, the agency was against a similar proposal.
According to Liberty's Malone the biggest snags in a potential transaction right now are related to taxes. CNBC notes that Malone only likes to do transactions when they are tax free. Currently, Liberty is evaluating a number of options, including a potential stock buyback.
On Thursday, SIRI shares were trading up 1 percent to $2.05.
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