In February 2009 John Malone’s Liberty Media rescued Sirius XM with a $530 million loan. Sirius and XM had just merged months before. During the 17 months it took to get FCC and DOJ approval, the economy tanked and new car sales plunged. Sirius XM traded as low as 5 cents per share and hired lawyers to prepare a bankruptcy filing.
Great article, how do you see the deal right now? Siri dropped a lot and lot of short interest with a limited free float. I am wondering if the shorters have to cover before merger or if they are long Liberty tracking shares will the short be offset after merging with Siri?
I imagine that most SIRI shorts have bought LSXMK to cover their short post merger. I would not expect short covering to drive prices higher. However, I am bullish post close. The stock will have a simplified structure, be eligible for index inclusion, and trade at a low multiple of FCF with a path to significant capital returns. Unfortunately the spread didn't close in the desired manner but the trade remains favorably asymmetric.
I think the dividend is good (look at chtr without dividend to see the disaster of declining fcf and high leverage). However, I still think it could trade at the lower end of 3.5-4/share which in the investment banking valuation in the proxy shows a lower bound of 3.5. Still, at 3.5, it is about the current market price of LSXMK.
Really great overview of the situation.
Great article, how do you see the deal right now? Siri dropped a lot and lot of short interest with a limited free float. I am wondering if the shorters have to cover before merger or if they are long Liberty tracking shares will the short be offset after merging with Siri?
I imagine that most SIRI shorts have bought LSXMK to cover their short post merger. I would not expect short covering to drive prices higher. However, I am bullish post close. The stock will have a simplified structure, be eligible for index inclusion, and trade at a low multiple of FCF with a path to significant capital returns. Unfortunately the spread didn't close in the desired manner but the trade remains favorably asymmetric.
I think the dividend is good (look at chtr without dividend to see the disaster of declining fcf and high leverage). However, I still think it could trade at the lower end of 3.5-4/share which in the investment banking valuation in the proxy shows a lower bound of 3.5. Still, at 3.5, it is about the current market price of LSXMK.