Corporate Clash of the Titans? (SIRI, LMCA)
Is a corporate clash of the titan set up in Liberty Media's (NASDAQ: LMCA) attempt to take control of Sirius/XM Radio (NASDAQ: SIRI)? It appears likely, as billionaire John Malone looks set to try to buyout Sirius. Malone already owns a stake in Sirius, and speculation is building that he wants to takeover Sirius so as to be able to spin it out to current Liberty Media Investors in a tax efficient way.
Liberty Media, in these plans, would likely get rid of Sirius CEO Mel Karmazin under this deal and would probably task Liberty CEO Greg Maffei with running the satellite radio company. It is reported that Maffei is tired of being a portfolio manager for a broad swath of companies and is seeking a role as a CEO of a sole company.
However, Karmazin has been the master of the satellite radio provider's success, and Malone may not be so quick to dispose of him. Karmazin has a long history in the media industry, having run CBS Corp until 2000 when he left for Viacom (NASDAQ: VIA), before becoming the CEO of Sirius Satellite Radio. He also led the company through its merger with XM.
Liberty's interest in Sirius arises from the so-called Reverse Morris Trust: a vehicle that allows a company top distribute the shares of a subsidiary to its investors in a tax free manner, rather than having to sell a large position and pay taxes on it. A spinoff like this also benefits Liberty shareholders more.
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