Another Indication That Liberty May Buy Sirius XM

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Includes: LMCA, SIRI
by: Satwaves

Both Sirius XM Radio (NASDAQ: SIRI) and Liberty Capital (NASDAQ: LCAPA) have reported their first quarter results. The team of analysts that follow both companies failed to question the recent news, that the Department of Justice and Federal Trade Commission had given the green light for Liberty to increase its stake in Sirius XM Radio. (See latest earnings call transcripts for Liberty and Sirius.)

There has yet to be a single filing to indicate that Liberty had in fact increased its position in Sirius XM, despite a record 600 million share trading day that followed news of the approval. This had forced me to speculate that a buyout offer could come at any time.

Of course, my own suppositions when it comes to speculation regarding Sirius XM should be taken with a grain of salt. On the other hand, when a senior writer for Business Week reports on the news a month later, speculation can quickly turn into fact. In this case, I’m referring to BusinessWeek.com Senior Technology Writer, Olga Kharif.

Kharif has just published a very good piece on Sirius XM, in which she reveals that Liberty will be increasing its stake in Sirius XM to more than 50%. The author writes:

“On Mar. 31, Liberty Media received government clearance to acquire more than half of Sirius XM’s common shares at some point in the future. Liberty may buy common shares that would lift its stake to more than 50 percent in the coming months, according to a person familiar with the situation.”

I had speculated that Liberty could be seeking to increase its position to 49% which would have permitted open market purchases of over 600 million shares of SIRI common stock. Kharif on the other hand has verified Liberty’s intent to increase its equity stake even further.

The entire article can be found here.

Timeline:

February 26,2010, Greg Maffei expresses an interest in buying Sirius XM Radio

April 3,2010, Justice gives approval under the premerger notification program for an acquisition of Sirius XM by Liberty Capital

Disclosure: Long SIRI