Liberty Media likely has a plan for securing control of...
Liberty Media likely has a plan for securing control of Sirius XM, Evercore Partners analyst Bryan Kraft wrote investors Thursday. By acquiring additional Sirius shares, “Liberty might already be executing an ownership increase through a forward purchase contract,” he said:…
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If the media holding company gains control, the satellite radio provider “would adopt a share repurchase program to put to use Sirius’ [free cash flow] and leverage capacity.” Although Liberty might intend to participate in share repurchases, “we believe this is subject to change as Liberty might opt to use Sirius’ share repurchases to accrete its ownership in Sirius instead, leading to Liberty owning all of Sirius’ equity over time,” the analyst wrote said. This decision will depend on a number of factors, like Sirius’ stock price and valuation, Liberty’s need for cash and its view on “the long-term potential of the business and potential future threats from [Internet protocol] competitors,” Kraft added. Liberty’s CEO said Wednesday that the company remains interested in increasing its Sirius XM stake above 50 percent (CD Aug 9 p6).