Liberty Media Corp.
) announced a major adjustment to the conversion rate of its 1.375%
Cash Convertible Senior Notes, due 2023. So far, the company had
two categories of outstanding voting shares. Series A (LMCA) offers
one vote per share while Series B (LMCB) offers ten votes per
In May 2014, Liberty Media's board of directors decided to offer
a stock dividend of two shares of its non-voting Series C common
stock for each share of LMCA and LMCB.
The whole stock restructuring exercise has almost tripled the
number of outstanding shares. The new conversion rate increased to
15.7760 shares of LMCA from the initial rate of 5.5882 shares of
LMCA per $1,000 principal amount of Cash Convertible Notes. As a
result, the stock price of Liberty Media crushed by an enormous
$92.37 (65.37%) to $48.94 yesterday.
However, the overall market value of the stock remains the same
owing to the issuance of new shares. The newly issued Series C
common stock will begin regular trading from today on the Nasdaq
Global Select Market under the ticker symbol LMCK.
Nonvoting classes are generally issued by a company when it is
pursuing the acquisition of another company with stocks. In early
2014, Liberty Media was relentlessly focusing on taking the full
control over SIRIUS XM Radio Inc. (
), the largest satellite radio broadcaster in the U.S. Meanwhile,
management abandoned its plans to acquire full control of the
satellite radio broadcaster. Liberty Media currently controls more
than 50% stake of SIRIUS XM.
Notably, Liberty Media, which holds a 27.3% stake in Charter
Communications Inc. (
), was aggressively pursuing the idea of acquiring Time Warner
Cable Inc. However, Charter Communications has lost to Comcast
) in its bid to acquire Time Warner Cable. This disrupted Liberty
Media's plans of gaining significant traction in the U.S. cable
Moreover, Liberty Media has also decided to increase its stake
in Live Nation Entertainment Inc. from the existing 27%. Live
Nation is the largest concert promoter and ticketing company in the
U.S. If successfully completed, the deal will help Liberty Media
drive earnings and revenues as Live Nation Entertainment has
performed reasonably well in the last couple of years.
Liberty Media currently carries a Zacks Rank #3 (Hold).
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LIBERTY MEDIA-A (LMCA): Free Stock Analysis
SIRIUS XM HLDGS (SIRI): Free Stock Analysis
COMCAST CORP A (CMCSA): Free Stock Analysis
CHARTER COMM-A (CHTR): Free Stock Analysis
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