Sirius XM Jumps into Special Dividend and $2B Share Buyback

December 6, 2012 by Jon C. Ogg

Sirius Logo
Source: courtesy of Sirius XM Radio
Sirius XM Radio Inc. (NASDAQ: SIRI) is doing something that sounds nothing short of silly on the surface. The satellite radio monopoly announced that it would initiate a one-time special dividend of five cents per share and that it would repurchase up to $2 billion worth of common stock. This sounds no different from what other companies have done, but this is odd from Sirius XM, considering that it usually offers no dividend and shares are still close to multiyear highs.

What matters here is that Liberty Media Corp. (NASDAQ: LMCA) is in the process of taking control of Sirius XM. That has yet to occur, but Liberty keeps acquiring more shares, and it should be considered that Mel Karmazin has already announced his intention to retire.

With a $14.4 billion market cap, today’s $2 billion buyback could translate to the Sirius looking to absorb about 14% of its float.

Sirius shares are indicated to open up by about 2.5% at $2.84, against a 52-week trading range of $1.70 to $2.97.

JON C. OGG

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