On January 14, 2014, Ralph Nader sent letters to the CEOs of the top 10 institutional shareholders of Sirius XM Radio regarding the recent purchase of a majority of shares by John Malone’s Liberty Media Corporation. In this letter, Mr. Nader notes that as a growing company, Sirius has a 4 star rating by S&P with a “buy” recommendation. He called on these institutional shareholders to reject Mr. Malone’s inadequate offer. See below for the full text of the letter:
As a shareholder in Sirius XM, the offer by John Malone to buy out the 47 percent interest that his companies do not own came in well below the value of this growing company. Sirius is rated 4 stars by S&P, with a buy recommendation. Moreover, last week, Leon Cooperman, founder of hedge fund Omega Advisors, Inc. – a major holder of Sirius XM shares – declared, “We think the offer materially undervalues Sirius.”
Your Fund is listed as one of the top institutional investors in Sirius. Under Delaware law, John Malone must demonstrate that the Special Committee is “independent” and that a majority of the minority has been secured before making its decision.
I am writing this letter to urge you to reject this inadequate offer. More information is needed to allow the shareholders to determine how inadequate Malone’s offer is. That presumably is one of the objectives of the shareholder lawsuits that soon will be filed in Delaware’s Chancery Court.
Your fiduciary responsibilities, of course, run only in one direction, and that is to protect and improve the values and rights of your shareholders or investors. For your individual savers, this point can be phrased as maximizing the returns on retirement accounts and other savings accounts on Main Street, USA.
When a majority shareholder like John Malone, Inc. makes a move to acquire the remaining shares, in this case through a stock exchange, the majority shareholder’s representatives often contact the large institutional shareholders before the public announcement to get their reaction. This seems to be an unfair ex parte contact that can disadvantage individual minority shareholders or investors in your fund, especially since the institutions may hold a majority of the minority shares.
Were you contacted before the announcement directly or indirectly by the Malone interests? Kindly respond.
Obviously, all remaining shareholders of Sirius want to maximize their returns. The company is expanding its subscribers impressively, building up cash flow, and reducing its debt. It is about to register better price-earnings ratios and may commence regular dividend payments. Mr. Malone’s strategy is obviously to catch this advance early and low, to maximize his commercial values afterwards.
I urge you and other large institutional shareholders in Sirius XM to actively oppose this ludicrously low purchase offer in fulfillment of your solemn fiduciary duties commensurate with your influence.