(By Balachander) Sirius XM Radio Inc. (NASDAQ: SIRI) announced a $2 billion share buyback plan and declared a special cash dividend of $0.05 per share.
Liberty Media Corp. (NASDAQ: LMCA), which owns roughly 49.8 percent of SIRI shares, has indicated that it will participate in the share repurchases on a pro rata basis so that its relative ownership interest will not be affected by the program.
The New York-based provider of satellite radio services said it will fund the share buyback through cash on hand, future cash flow from operations and borrowings under its revolving credit facility.
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The company's special cash dividend is payable on December 28, 2012 to stockholders of record as of the close of business on December 18, 2012.
Sirius XM, which has 23.4 million subscribers, expects the total amount of the cash dividend to be about $325 million.
"The combined announcement reflects the Board's desire to return value to stockholders and its confidence in the long-term growth prospects of the company's business," Sirius XM said in a statement.
Sirius XM's announcement on Thursday "will not derail the eventual takeout of the company by Liberty Media," Piper Jaffray wrote in a note seen by theflyonthewall.com.
SIRI shares, which have been trading in the 52-week range of $1.70 to $2.97, gained 2.17 percent to trade at $2.83 on Thursday. LMCA shares rose 1.51 percent to trade at $108.01.