Who Swapped Shares of Sirius XM With Liberty Media? It Turns Out to Be Warren Buffett’s Berkshire Hathaway.
A share swap has lifted Liberty Media’s stake in Sirius XM to just over 80%.
Andrew Harrer/Bloomberg
Warren Buffett and media mogul John Malone are both skilled in the art of tax-efficient transactions and they showed it again this week — with each other.
Buffett’s Berkshire Hathaway (ticker: BRK.B) and Malone’s Liberty Media did a stock swap involving shares of Sirius XM Holdings (SIRI), the satellite radio company, and Liberty SiriusXM Group (LSXMA), in a move that could provide significant financial and tax benefits for Liberty Media.
Berkshire said in a filing on Wednesday that it purchased on Monday 5.3 million class A shares of Liberty SiriusXM Group, one of the three tracking stock for Liberty Media, at $50.02 a share, in a transaction worth $267 million.
On Thursday, Liberty Media, in its third-quarter earnings release, noted that it had effected a tax-free exchange of 5.3 million class A shares of LibertyXM Group for 43.7 million shares of Sirius XM on Wednesday. Malone is chairman of Liberty Media.
Liberty CEO Greg Maffei didn’t say on the company’s conference call Thursday who the counterparty was for the stock swap. But Liberty reported Thursday in a 13-D filing that the exchange was with Geico, the auto insurer owned by Berkshire. Geico swapped the 43.7 million Sirius shares for the Liberty tracker.
Liberty Media declined to comment. Berkshire did not immediately respond to a request for comment.
The deal lifted Liberty Media’s stake in Sirius XM to just over 80%, which will allow Sirius dividends to be received tax free at Liberty and allow Liberty to consolidate Sirius’ results for tax purposes. Hitting the 80% threshold was a long-awaited event at Liberty. Its percentage stake in Sirius had been rising as Sirius bought back stock.
Berkshire was already a big holder of the Liberty SiriusXM tracking stock, whose main attributed asset is Liberty’s $21 billion stake in Sirius XM, and the swap puts Berkshire close to a 20% stake. Liberty SiriusXM class A shares finished Friday at $55, up $2.02. Sirius XM stock was up 2 cents Friday, to $6.41.
On Liberty’s earnings conference call Thursday, Maffei said the transaction involving the Sirius stock was done in a way that would allow Sirius to become an actively traded business, or ATB, for Liberty.
“But look, our whole idea is to create optionality, we have nothing to announce today about that,” Maffei said. “We would have gone over 80% probably with Sirius’ continued buyback. But the way we transacted with the tax-free exchange allowed it to become an ATB or something we expect will be in ATB and great optionality and flexibility. So no plans, but we always like having ATBs. You can’t have enough of them.”
Liberty’s only actively traded business has been the Atlanta Braves baseball team, which is the basis for another Liberty tracking stock, Liberty Braves Group (BATRK). Having Sirius as an actively traded business could give Liberty more flexibility to create asset-based stocks for its key assets and potentially do spinoffs.
Liberty’s third major asset, the Formula One auto racing business, now traded as a third tracker, Liberty Formula One Group
(FWONA), is due to become an actively traded business in early 2022, the fifth anniversary of its purchase by Liberty.
Write to Andrew Bary at [email protected]
