Liberty acquires rest of Digital

Oct 22, 2001  •  Post A Comment

Liberty Media Corp.’s decision to acquire the portion of Liberty Digital and Liberty Satellite & Technology that it doesn’t already own will give it more of an opportunity to grow those assets as it wants.
A volatile stock market and uncertain economy have played havoc with initial plans to use the public currency of both subsidiaries in deals.
Because John Malone’s Liberty owns 92 percent of Liberty Digital’s outstanding common stock, the tax-free transaction can occur as a “short-form” merger without shareholder approval. For each of their common shares, Liberty Digital shareholders will receive 0.25 shares of Liberty Media Corp. Series A common stock, which has been trading at around $12 a share, off its 52-week high of $19.25. But even Liberty Media has dipped below $10 a share. Shareholders of LSAT would receive 0.09 shares of Liberty Media Series A common stock for each LSAT common share.
Previously announced plans for Liberty Media to contribute its Ascent Entertainment Group and its 89 percent stake in Liberty Satellite for a major stake in LSAT have been placed on hold, pending the proposed merger of LSAT into Liberty Media Corp.
Liberty Digital was formed in 1999 with Liberty assets including TCI Music, DMX/AEI Music and The Game Show Network.
Analysts say Liberty is making the most of a weak stock market to restructure some of its vast holdings. Last week, Liberty and Sony Pictures Entertainment agreed to sell the Spanish-language Telemundo to General Electric Co.’s NBC for $2.6 billion. Liberty and Sony acquired Telemundo for $600 million. Liberty’s original $108 million investment in Telemundo will yield $700 million in highly valued GE stock after its sale to NBC.
“The transaction underscores Liberty’s value-creation skills and ability to monetize assets at their peak value,” said Stuart Linde, analyst at Lehman Bros.