For investors, it's usually quite a relief when one of their companies simplifies its ownership structure. That was the dynamic behind satellite radio broadcaster Sirius XM Holdings' (NASDAQ: SIRI) nearly 3% gain in stock price on Tuesday. That improvement was much better than the 0.5% gain of the S&P 500 index on the day.
The new Sirius will have a simplified ownership structure
Before market open, Sirius and its majority shareholder Liberty Media(NASDAQ: LSXMA)(NASDAQ: LSXMB)(NASDAQ: LSXMK) announced the move in a joint press release. The two have signed definitive agreements under which they will be combined into a new, publicly traded entity. This, in addition to the blended company's broadcasting operations, will be known as SiriusXM.
The new-look Sirius will have one outstanding series of common stock, which is expected to trade under the current entity's ticker symbol of SIRI. All told, there will be just under 3.4 billion shares outstanding of the future company. Sirius and Liberty Media said that the latter's investors will hold roughly 81% of the business.
The arrangement doesn't seem as if it'll affect the current Sirius' strategy. The two media companies quoted Sirius CEO Jennifer Witz as saying that
We have built a profitable business that is poised for continued success. With our strong foundation and as we roll out our next generation platform, we are transforming SiriusXM to drive long-term growth and stockholder value creation.
Taking it positively, at least for the moment
Liberty Media's ownership structures are notoriously complicated, so any simplification of Sirius' is more than welcome. That doesn't necessarily mean it'll transform into something ultrastraightforward, however, and it raises a question mark about whether Sirius will subsequently be inserted into its partner's numerous other ventures in some fashion. For now, though, Sirius investors are taking it as a positive development.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
