Shares increased 7% to $3.83 for Satellite radio provider Sirius XM Holdings Inc (NASDAQ:SIRI) recently, giving its investors much needed confidence.  Not just in its future performance, but also that Liberty Media Corp (NASDAQ:FWONA) will counter its own recent low buyout offer of $3.68 (which many have taken as an insult) with a new and significantly increased one. Consumer activist Ralph Nader (a shareholder of Sirius XM) called Liberty Media's offer "ludicrous" in a statement issued by way of press release.

Nader also threatened Liberty Media with legal action. "Sirius was trading over $4.00 a share a few weeks ago and is a very fast growing company with bright indicators and registers four stars by Standard & Poor's, which recommends a buy." Nader went on to say "I am sure that I, along with other shareholders in Sirius XM, will be interested in a legal challenge to John Malone's company for lowballing Sirius XM's shareholder value." Is Nader overreacting? Maybe not, especially since Liberty Media is already heavily invested in Sirius XM.

So heavily, that Liberty owns a controlling stake (52%) in Sirius XM. It's obvious as to why Liberty is taking heat over its offer, but is there a legitimate reason for the low offer? If so, Liberty hasn't revealed it, well not exactly. But one thing is for sure, if accepted, Liberty's offer would convert shares of Sirius into what would become new shares of Liberty Series C non-voting stock. It is a deal that would make Sirius XM a wholly owned subsidiary of Liberty, but the proposed exchange rate values Sirius at just $3.68 a share, which was a 3% premium to the following Friday's closing price, but a 4% discount to where the stock closed on the following Monday.

The above was reported by  But Sirius shareholders need not worry so much, since Liberty's unpopular proposal requires approval from a special Sirius committee of independent directors. It must also be approved by winning a majority vote between Sirius' minority shareholders, which is unlikely. Leon Cooperman, founder of hedge fund Omega Advisors, whose fund holds roughly 1.2% of Sirius' shares expressed his dissatisfaction with Liberty's offer in an interview.

"We think the offer materially undervalues Sirius." Mr. Cooperman went on to say that the offer reminded him of last year's attempt by Mr. Malone's Liberty Global (NASDAQ:LBTYA) to acquire the remaining 50% of Belgian cable-television operator Telenet Group Holding NV. Mr. Cooperman and others hesitated at the tender, and Liberty Global was only able to raise its stake to somewhere around 58%. Telenet eventually paid a special dividend, and shares rose sharply for the year. Mr. Cooperman believes he made the correct decision not to tender there.

So far, Liberty Media Corp has stood by its offer to Sirius as not only being fair, but they are also convinced that Sirius shareholders would benefit from being converted from a minority position in Liberty, collectively holding 39% of Liberty after the transaction. If the current offer was accepted, what would the deal mean for Liberty? For one, it would allow the company to leverage Sirius' balance sheet while it pursues acquisitions and stock buybacks.

Sirius XM is expected to generate earnings before interest, taxes, depreciation and amortization of $1.2 billion in 2013 on revenue of $3.8 billion, this according to S&P Capitol IQ. What's more interesting about Liberty's offer to Sirius is Liberty owns 27% of cable operator Charter Communications, which has offered several times to take over Time Warner Cable (UNKNOWN:TWC.DL).

If Time Warner were to accept Charter's offer, Liberty would have to seriously consider investing more money in Charter, that is if it wants to maintain its equity stake at its current level. Tuna Amobi, an S&P Capitol IQ analyst said in a note that Liberty's buyout offer for Sirius "seems partly intended to broaden its financing options, ahead of a possible play for Time Warner Cable. While Sirius XM might be in a storm created by Liberty Global at present, I expect the calm will be more than satisfying for Sirius shareholders.