Liberty Drops Sirius Bid, Creates Stock to Help Charter Expand

Liberty Media Corp. (LMCA), billionaire John Malone’s holding company, abandoned its bid for full control of Sirius XM Holdings Inc. and laid out a plan to help fund Charter Communications Inc. (CHTR)’s expansion. Rights to the tracking stock, for a unit to be called Liberty Broadband, will be sold to raise money for investments in new business opportunities, the company said yesterday in a statement. Liberty Broadband will include the company’s 25 percent stake in Charter, which made an unsuccessful proposal to acquire Time Warner Cable Inc. this year. Liberty, which owns 53 percent of Sirius, had offered earlier this year to buy the satellite-radio carrier’s remaining shares. The deal could have given Liberty cash flow and additional assets to borrow against to help fund Charter’s Time Warner Cable bid. Now that Time Warner Cable has agreed to be bought by Comcast Corp., Liberty is taking another approach to fund cable investments. “We remain very excited about our investments in the cable sector and Charter Communications,” Liberty Chairman John Malone said in the statement. “The creation of the Liberty Broadband tracking stock and the concurrent rights offering will provide us greater flexibility to, among other things, support Charter in its expansion efforts.” Malone has pushed for mergers in the cable industry, arguing that companies can gain greater leverage in negotiations with TV networks and more purchasing power for expenses such as marketing. He acquired his Charter stake last year with an eye toward making further investments in the industry, only to be thwarted by Comcast in its biggest conquest.

Sirius Trouble

Liberty didn’t specify how much it aims to raise and whether it might seek acquisitions or a new bid for Time Warner Cable. Courtnee Ulrich, a spokeswoman, didn’t immediately return a phone message. Sirius’s board had formed a committee of directors to consider Liberty’s offer, originally valued at $3.68 a share. Any deal would have been subject to approval by those board members, as well as a majority of the New York-based company’s shareholders. The satellite-radio company was sued in January by two shareholders contending that directors violated their duties to get the best price in the buyout by parent Liberty. Sirius shares closed yesterday at $3.37 before Liberty announced it would drop the bid. The stock fell as low as $3.27 in late trading. “Depending on market conditions, we look forward to further discussions with the Sirius XM special committee,” Liberty Chief Executive Officer Greg Maffei said in the statement. In addition to the Charter stake, the Liberty Broadband tracking stock will include Liberty’s own stake in Time Warner Cable and a wholly owned geographic-location technology company, TruePosition Inc. Liberty held Time Warner Cable stock worth $320 million at the end of last year, according to a filing. A separate tracking stock, Liberty Media, will include all the company’s other assets, including its Sirius stake. To contact the reporter on this story: Crayton Harrison in New York attharrison5@bloomberg.net To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net Crayton Harrison Source :  http://www.bloomberg.com/news/2014-03-13/liberty-media-creates-stock-to-help-fund-charter-investments.html