DEFM14C: Liberty Media and Sirius XM Holdings Announce Agreement to Combine Liberty SiriusXM Group with Sirius XM Holdings

Liberty Media and Sirius XM Holdings have agreed to combine Liberty Medias Liberty SiriusXM Group with Sirius XM Holdings, creating a new consolidated public company under the Sirius XM Holdings name.

Summary

• Liberty Media and Sirius XM Holdings are set to combine Liberty Medias Liberty SiriusXM Group with Sirius XM Holdings.
• The new entity will operate under the Sirius XM Holdings name and brands, featuring a single class of shares and a board with a majority of independent directors.
• Liberty Media will separate the Liberty SiriusXM Group through a redemptive split-off, contributing all related businesses, assets, and liabilities to New Sirius, a wholly-owned subsidiary.
• Following the split-off, Merger Sub will merge with and into Sirius XM Holdings, with Sirius XM Holdings surviving as a wholly owned subsidiary of New Sirius.
• Each share of Sirius XM Common Stock will be converted into the right to receive one-tenth (0.1) of a share of New Sirius Common Stock, with cash paid in lieu of fractional shares.
• Former Sirius XM Holdings stockholders (excluding Liberty Media and its subsidiaries) are estimated to own approximately 19% of the new company, while former Liberty SiriusXM Common Stock holders will own the remaining shares.
• The new company's common stock is expected to be listed on the Nasdaq Global Select Market under the ticker symbol SIRI.
• Liberty Media will hold a special meeting on August 23, 2024, for LSXMA and LSXMB stockholders to vote on the Redemption.
• The Malone Stockholders have agreed to vote their shares in favor of the Split-Off Proposal, representing approximately 48.3% of the total voting power.
• The Split-Off and Merger are expected to be completed approximately two weeks after the Liberty Special Meeting, pending satisfaction of other conditions.
• Liberty Radio, LLC, a subsidiary of Liberty Media, has already provided written consent to adopt the Merger Agreement, making further stockholder action unnecessary.
• The document serves as an information statement for Sirius XM Holdings stockholders and a proxy statement for Liberty Media LSXMA and LSXMB stockholders.

Sentiment

Score: 7

Explanation: The document is largely positive, outlining the benefits of the merger and the expected outcomes. However, it also acknowledges potential risks and uncertainties, preventing a higher score.

Positives

• The new company will have a simplified capital structure with a single class of shares.
• The new company will have no majority stockholder, improving governance.
• The transaction is expected to be generally tax-free to Liberty Media and its stockholders.
• The new company will have an asset-backed equity currency with significant float, potentially improving access to capital.
• The new company will have expanded opportunities for index inclusion.

Negatives

• The Exchange Ratio is not fixed and may vary, impacting the number of shares received.
• The market value of New Sirius Common Stock may vary significantly from the value of Sirius XM Common Stock.
• Certain Liberty Media and Sirius XM Holdings directors and executive officers have interests that may differ from those of other stockholders.
• The number of shares of New Sirius Common Stock to be issued in the Split-Off is based on an Exchange Ratio that does not take into account fluctuations in the share prices of Sirius XM Common Stock.

Risks

• The Exchange Ratio is subject to change based on various factors.
• The market value of New Sirius Common Stock may fluctuate.
• The parties may be unable to achieve the expected benefits from the Transactions.
• The Transactions could face potential tax liabilities.
• The Transactions could be delayed or not completed.
• The Transactions could face potential litigation.

Future Outlook

The Split-Off and Merger are expected to be completed approximately two weeks after the Liberty Special Meeting, assuming all other conditions are satisfied.

Management Comments

• Gregory B. Maffei, President and Chief Executive Officer of Liberty Media, and Jennifer C. Witz, Chief Executive Officer of Sirius XM Holdings, express their pleasure in the successful combination of the Liberty SiriusXM Group and Sirius XM Holdings.

Industry Context

The merger reflects a trend of consolidation in the media and entertainment industry, aiming to create a more competitive and streamlined entity in the evolving digital landscape.

Comparison to Industry Standards

• Comparable companies in the media and entertainment industry include Charter Communications, Comcast Corporation, Endeavor Group Holdings, Fox Corporation, iHeartMedia, Lions Gate Entertainment Corporation, Netflix, Inc., Paramount Global, Roku, Inc., Spotify Technology S.A., Universal Music Group N.V., The Walt Disney Company and Warner Bros. Discovery, Inc.
• The document does not provide enough information to compare the results to global benchmarks.

Management Changes

Corporate Governance

Legal Proceedings

• The document mentions the settlement of the Specified Litigation Matter, which has been dismissed with prejudice pursuant to the Order and Final Judgment and subject to the terms of the Agreed Settlement.
• The document mentions a lawsuit filed by the People of the State of New York, by Letitia James, Attorney General of the State of New York, against Sirius XM Radio Inc. alleging various violations of New York law and the federal Restore Online Shoppers Confidence Act (ROSCA) arising out of subscription cancellation practices.

Related Party Transactions

• The document mentions that Liberty Media owns approximately 83% of Sirius XM Holdings.
• The document mentions that certain entities affiliated with John C. Malone entered into a Voting Agreement with Liberty Media, New Sirius and Sirius XM Holdings.
• The document mentions that Liberty Media will enter into a Tax Sharing Agreement with New Sirius.

Stakeholder Impact

• Stockholders of Liberty SiriusXM Common Stock will receive shares of New Sirius Common Stock.
• Stockholders of Sirius XM Common Stock will receive shares of New Sirius Common Stock.
• Employees of Liberty Media and Sirius XM Holdings may experience changes in their roles and responsibilities.
• Customers of Sirius XM Holdings will continue to receive services under the Sirius XM and Pandora brands.

Next Steps

• Liberty Media will hold a special meeting of its LSXMA and LSXMB stockholders on August 23, 2024, to vote on the Redemption.
• The Split-Off and Merger are expected to be completed approximately two weeks after the Liberty Special Meeting, pending satisfaction of other conditions.
• New Sirius Common Stock is expected to be listed on the Nasdaq Global Select Market under the ticker symbol SIRI.

Key Dates

Keywords

Merger, Sirius XM Holdings, Liberty Media, Liberty SiriusXM Group, Split-Off, New Sirius, Exchange Ratio, Stockholders, Transactions, Voting Agreement