By Lisa Kerner
Charlotte, N.C., May 4 - DirecTV Group, Inc. will combine with Liberty Entertainment, Inc., a company to be split off from Liberty Media Corp., it was announced on Monday.
"This transaction clarifies DirecTV's capital structure, reduces its shares outstanding, eliminates stock overhang and arbitrage issues, and provides DirecTV with strategic content businesses," Greg Maffei, president and chief executive officer of Liberty Media, said in a joint news release.
"And this transaction offers value to Liberty's shareholders by eliminating the discount in our tracking stock structure and allowing them to continue to participate directly in the strong performance of DirecTV," Maffei said.
The companies said they expect the split-off and mergers to be complete in the fourth quarter of 2009.
Liberty Entertainment will be comprised of approximately 54% of the common stock of DirecTV, all of Liberty Sports Holdings and a 65% interest in Game Show Network and FUN Technologies.
DirecTV said it will provide Liberty Entertainment with up to $650 million in funding under a term loan facility in order to service the Liberty Entertainment debt.
The businesses, assets and liabilities of the Liberty Entertainment group tracking stock not included in the split-off of Liberty Entertainment will continue to be attributed to the Liberty Entertainment group, which will be renamed Liberty Starz.
Holders of Liberty Entertainment's series A and series B common stock will receive 1.1111 shares of DirecTV class A common stock for each share of Liberty Entertainment series A or series B common stock held.
DirectTV shareholders will receive one share of DirecTV class A common stock for each share of DirecTV common stock held.
Holders of series A Liberty Entertainment group tracking stock will receive 0.9 of a share of Liberty Entertainment series A common stock and will retain 0.1 of a share of Liberty Starz stock for each share of series A group tracking stock held at the time of the split-off.
Holders of series B Liberty Entertainment group tracking stock will receive 0.9 of a share of Liberty Entertainment series B common stock and will retain 0.1 of a share of Liberty Starz stock for each share of series B group tracking stock held at the time of the split-off.
Each holder of one share of Liberty Entertainment group tracking stock retaining ownership of Liberty Entertainment stock through completion of the mergers will receive one share of class A common stock of DirecTV and will retain 0.1 of a share of Liberty Starz stock, subject to adjustment.
DirecTV is an El Segundo, Calif., provider of digital multichannel television entertainment.
Liberty Media is an Englewood, Colo., entertainment company.
| Acquirer: | DirecTV Group, Inc.
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| Target: | Liberty Entertainment, Inc.
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| Announcement date: | May 4
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| Expected closing: | Fourth quarter of 2009
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