In a significant corporate move, Sirius XM Holdings Inc. (NASDAQ:SIRI) announced today that it will merge with a subsidiary of Liberty Media Corporation, marking a new chapter for the radio broadcasting giant.
The merger, set to take effect at 6:00 p.m. on September 9, 2024, will see Sirius XM become a wholly-owned subsidiary of the newly formed company, which will adopt the name Sirius XM Holdings Inc. and continue to trade on Nasdaq under the ticker symbol "SIRI" starting September 10, 2024.
The announcement follows a special meeting held today where holders of Liberty Media's Series A and Series B common stock approved a redemption plan. Each outstanding share of the Liberty SiriusXM common stock will be exchanged for shares in the new company, with the exchange ratio defined in the Reorganization Agreement.
This strategic move comes after a series of agreements between Sirius XM and Liberty Media, including a Reorganization Agreement initially dated December 11, 2023, and subsequently amended on June 16, 2024.
The merger is contingent upon the satisfaction of conditions outlined in the Merger Agreement and the Reorganization Agreement, which include the completion of a redemptive split-off.
The merger is expected to streamline the corporate structure and potentially create a more efficient and focused entity. Sirius XM, known for its satellite radio services, has been a subsidiary of Liberty Media since Liberty acquired a controlling interest in the company.
In other recent news, Sirius XM has been the subject of attention from Deutsche Bank and its own Q2 2024 earnings call. Deutsche Bank has revised its price target for Sirius XM to $3.00 from the previous $3.75 due to lower estimates for the company's EBITDA and free cash flow. The bank maintains a Hold rating on the stock, emphasizing the importance of subscriber growth for revenue and EBITDA expansion.
Sirius XM's recent Q2 2024 earnings report revealed an 8% sequential increase in adjusted EBITDA and a year-over-year improvement in margins.
Despite a decline in subscriber and advertising revenue in the SiriusXM segment, the company saw a 2% revenue increase in the Pandora (OTC:PANDY) and off-platform segment. The company's free cash flow for the quarter was reported at $343 million, marking a 6% increase from the previous year.
In terms of growth strategy, Sirius XM has implemented several initiatives including a revamped streaming experience, a new in-vehicle pricing model, and the expansion of 360L installation rates. The company also plans to open a European tech hub and is focusing on cost optimization and strategic investments.
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