Sirius XM (SIRI) Holders All Riled Up as Liberty Media Makes a Major Move

August 8, 2012 3:55 PM EDT
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News today from Liberty Media Corporation (Nasdaq: LMCA) (Nasdaq: LMCB) that it plans separate the assets of Liberty Media and Starz, LLC, creating two separate asset-backed stocks, has investors in Sirius XM (Nasdaq: SIRI) buzzing.

In a statement on the news, Greg Maffei, President and CEO of Liberty, said, "This transaction will provide better transparency on the Starz operating business; optimize the Starz capital structure; permit us to better pursue our strategic objectives, including creating two currencies that could be used for acquisitions; and create significant liquidity at Liberty Media, which preserves all our options with respect to SiriusXM and Live Nation (NYSE: LYV)."

Shares of SIRIUS XM Radio are ramping today following the news. This is related to speculation that Liberty could be ready to make a move for SIRIUS. In addition, the company is benefiting from a debt upgrade at Moody's.

While investors in SIRIUS are clearly excited, comments from Maffei suggest nothing is imminent.

"Our view is that Sirius is under leveraged and there's plenty of opportunity for share repurchase and other financial actions that the company, which we deem is ultimately positive," Maffei stated on the conference call.

Despite the comments, analyst see an eventual transaction. "This could also be a logical step toward potentially effecting a merger or Reverse Morris Trust transaction with the remaining Liberty Media assets and Sirius XM Radio," according to ISI Group analyst Vijay Jayant.

Shares of Sirius XM last traded up 7.4 percent to $2.47 after hitting a new 52-week high of $2.51 earlier in the session.

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