January 14, 2014
F. William McNabb III, CEO
Vanguard Group, Inc.
P.O. Box 1110
Valley Forge, PA 19482-1110
Dear Mr. McNabb,
As a shareholder in Sirius XM, the offer by John Malone to
buy out the 47 percent interest that his companies do not own
came in well below the value of this growing company. Sirius is
rated 4 stars by S&P, with a buy recommendation. Moreover, last
week, Leon Cooperman, founder of hedge fund Omega Advisors, Inc.
- a major holder of Sirius XM shares - declared, “We think the
offer materially undervalues Sirius.”
Your Fund is listed as one of the top institutional
investors in Sirius. Under Delaware law, John Malone must
demonstrate that the Special Committee is “independent” and that
a majority of the minority has been secured before making its
decision.
I am writing this letter to urge you to reject this
inadequate offer. More information is needed to allow the
shareholders to determine how inadequate Malone's offer is. That
presumably is one of the objectives of the shareholder lawsuits
that soon will be filed in Delaware's Chancery Court.
Your fiduciary responsibilities, of course, run only in one
direction, and that is to protect and improve the values and
rights of your shareholders or investors. For your individual
savers, this point can be phrased as maximizing the returns on
retirement accounts and other savings accounts on Main Street,
USA.
When a majority shareholder like John Malone, Inc. makes a
move to acquire the remaining shares, in this case through a
stock exchange, the majority shareholder's representatives often
contact the large institutional shareholders before the public
announcement to get their reaction. This seems to be an unfair
ex parte contact that can disadvantage individual minority
shareholders or investors in your fund, especially since the
institutions may hold a majority of the minority shares.
Were you contacted before the announcement directly or
indirectly by the Malone interests? Kindly respond.
Obviously, all remaining shareholders of Sirius want to
maximize their returns. The company is expanding its subscribers
impressively, building up cash flow, and reducing its debt. It
is about to register better price-earnings ratios and may
commence regular dividend payments. Mr. Malone's strategy is
obviously to catch this advance early and low, to maximize his
commercial values afterwards.
I urge you and other large institutional shareholders in
Sirius XM to actively oppose this ludicrously low purchase offer
in fulfillment of your solemn fiduciary duties commensurate with
your influence.
Sincerely yours,
Ralph Nader
PO Box 19312
Washington, D.C. 20036
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