Sirius XM Radio Inc. (SIRI:US) directors were sued by investors who contend the board isn’t doing enough to protect the satellite-radio provider from a potential takeover by Liberty Media Corp. (LMCA:US)
Sirius shareholders contend in a Delaware Chancery Court suit that Sirius directors have failed to erect anti-takeover defenses for the U.S.’s largest satellite broadcaster despite efforts by Liberty Media Chairman John C. Malone to gain control of the company. Because Liberty owns a 48 percent stake of Sirius, Malone is on the radio provider’s board.
Malone and other Liberty executives serving on Sirius’s board are improperly barring fellow directors from “adopting anti-takeover provisions even if doing so would be in the best interests” of the company, a Florida pension fund said in the complaint, filed today in Delaware Chancery Court in Wilmington.
Liberty Media, based in Englewood, Colorado, said earlier this month that it intends to increase its holding in Sirius to more than 50 percent to take control the firm and its airwave licenses.
Kelly Sullivan, a spokeswoman for Sirius, didn’t immediately respond to an e-mail seeking comment on the suit. A Liberty spokeswoman, Courtnee Ulrich, also didn’t respond to an e-mail seeking comment.
Liberty Media officials said in an Aug. 17 filing with the Federal Communications Commission that by increasing its stake, the company is poised to take control of Sirius within 60 days of receiving regulators’ approval of airwave-license transfers.
Liberty Media is a holding company with a range of investments, including stakes in the cable TV programmer Starz LLC and Major League Baseball’s Atlanta Braves. Malone, a billionaire, said last month he intends to spin off Sirius as a publicly traded company once he gains a controlling stake.
Malone got the Sirius stake after providing a $530 million loan in 2009 that kept the satellite broadcaster out of bankruptcy. The investment agreement barred Malone from attempting to gain control of the radio provider for three years, investors said in the complaint.
Now that the three-year-period has ended, Malone and Liberty are seeking to “effectuate a creeping takeover of Sirius” without paying a premium, the City of Miami Police Relief and Pension Fund, a Sirius shareholder, contends in the complaint.
Sirius directors who aren’t beholden to Malone and Liberty, including current CEO Mel Karmazin, have publicly stated their opposition to the takeover, “yet the Sirius board has not implemented a poison pill or otherwise acted to stop Malone,” the fund said in the complaint. Karmazin was the president of CBS Corp. (CBS:US) before the broadcaster was acquired by Viacom Inc. (VIAB:US) in 2000.
The case is City of Miami Police Relief and Pension Fund v. Sirius XM Radio Inc., Delaware Chancery Court (Wilmington).
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