Liberty Media's plan -- revealed after Friday's market close -- offers only a meager premium to where the stock was at, but it's not as if Sirius XM has much of a choice. A special committee of Sirius XM's independent directors will consider the deal and a majority of non-Liberty Media investors will need to vote in favor of the transaction, but Liberty Media won't be denied. The stock would crater if it dumped its shares, and nobody wants to see that.
This was always a possible scenario when regulators cleared the way for Liberty Media to grow the initial 40% preferred share stake that it received for its shrewd financing move in 2009 to more than 50% of the media giant.
One would think that independent directors and shareholders outside of Liberty Media would prefer to hold out for kinder terms, but we all know who holds the ultimate leverage here. At least one legal eagle is rounding up a class-action lawsuit to get Liberty Media to pay more for Sirius XM, but John Malone and Greg Maffei didn't assemble Liberty Media's eclectic empire of assets by overpaying. If anything, seeing the market take Liberty Media's stock lower on the news this morning suggests that its shareholders think that it's already paying too much.
Then again, it could also be the market realizing that the allure of Sirius XM won't be the same if it doesn't have a low share price and trades as a pure play. The proposed transaction over the weekend would make Sirius XM 39% of the new Liberty Media and that may not be enough skin for shareholders who have bought into the potential of satellite radio and won't care for slower growing media properties.
Sirius XM has never been boring, and if these are the last few months of it as a stand-alone entity, you can rest assured that its final act won't be a boring one either.