Shares of Sirius XM, the satellite-radio company, experienced a significant drop following an announcement by majority shareholder Liberty Media. Liberty Media proposed a deal that would combine the tracking-stock group associated with their stake in Sirius XM, with the rest of the company.
The stock price fell by 10% to $3.60, adding to the overall decline of approximately 31% in Sirius XM shares this year.
On the other hand, shares of Liberty Media Corp., Series A Sirius XM, experienced a slight increase of about 12%, reaching $25.35 in premarket trading.
According to the proposed terms of the deal, shareholders of Sirius XM would receive shares of the newly formed combined company, along with a cash payment. The cash payment would depend on the amount of outstanding net debt that the new company would assume in the deal.
Based on the current share counts and projected outstanding principal debt tied to Liberty Media's Sirius XM tracking-stock group by the end of the year, each shareholder of Sirius XM would receive one share of the new company's common stock, along with a cash payment of 55 cents per share at closing, explained Liberty Media.