Market expects Sirius help; Chemed investor pushes spinoffs; Live Nation, Ticketmaster deal lacks support

By Cristal Cody

Tupelo, Miss., Feb. 13 - Sirius XM Radio Inc. said Friday it could file for bankruptcy protection by Tuesday, but a buyer or major investor is expected to emerge before then, an analyst told Prospect News.

Chemed Corp. had no comment Friday on a major shareholder's request to spin off its Roto-Rooter Inc. and Vitas Healthcare Corp. brands to pump up the stock price.

Live Nation, Inc. shares fell 32 cents, or 8.31%, to close at $3.53 on Friday after reports that the company's major shareholder may oppose the merger with Ticketmaster Entertainment, Inc.

On Wall Street Friday, investors sent indexes down ahead of the three-day weekend.

The Dow Jones Industrial Average dropped 82.35 points, or 1.04%, to 7,850.41.

The S&P 500 index fell 8.35 points, or 1.00%, to 826.84, and the Nasdaq Composite index shed 7.35 points, or 0.48%, to close at 1,534.36.

Sirius in serious need

Liberty Media Corp. is targeted as Sirius' possible investor for a loan to help the company fend off a hostile takeover from EchoStar Corp.

EchoStar holds $175 million of Sirius' convertible bonds that are due on Tuesday.

On Friday, Sirius said in a statement that it refinanced $172.5 million of outstanding bonds. The company also has $400 million of debt due in December 2009.

Shares of Sirius gained 3 cents, or 41.76%, to close at $0.1049 on Friday. The stock has traded from 5 cents to $3.89 over the past year.

James Goss, an analyst with Barrington Research, said bankruptcy is a last resort.

"It would totally wipe out the shareholders, and in this case, the shareholders also include a lot of the top management team," he said. "There is some greater narrowed gap of differences between either EchoStar or Liberty. Whoever it is, the stock has reacted as if [investors] are placing bets against bankruptcy and this is the last trading day before this takes place."

The stock market will be closed on Monday in observance of Washington's Birthday/Presidents Day.

Liberty Media shares rose 5 cents, or 0.92%, to $5.49 in trading. Shares of EchoStar closed down 4 cents, or 0.26%, to $15.17 on Friday.

Plumbing, hospice duo

A Chemed shareholder urged the company on Friday to spin off its Roto-Rooter plumbing and Vitas hospice care divisions to add shareholder value.

MMI Investments LP, which owns 3.6% of Chemed's outstanding shares, said in a letter sent to the company's board that the divisions should be separated through a tax-free spinoff.

MMI estimates a spinoff could add 40% to 75% to Chemed's closing price of $40.32 on Thursday.

Chemed shares rose $1.29, or 3.20%, on Friday to close at $41.61.

David Williams, a spokesman for Cincinnati-based Chemed, said in an interview on Friday that the company has no comment on the proposal "but the board and management strive to do anything that would create long-term shareholder value."

MMI said the only two things the plumbing and hospice care divisions share are attractive cash flow profiles.

"Logic clearly dictates that Roto-Rooter and Vitas do not belong together, and but for Chemed's lineage as a diversified conglomerate, they would already be separate entities," the firm said in the letter. "A takeover of these businesses in the present structure is highly unlikely due to the lack of a single strategic acquirer for both businesses."

No respect for Live Nation, Ticketmaster deal

Shapiro Capital Management is said to be against a merger of Live Nation and Ticketmaster over plans to keep Barry Diller, Ticketmaster's chairman, in a leadership role within the new company.

Ticketmaster shares lost 45 cents, or 9.09%, to close at $4.50 on Friday.

The merger has sparked concerns with lawmakers and musicians over the concentration of music industry clout.

Beverly Hills, Calif.-based Live Nation is the largest producer of live concerts in the world, and West Hollywood, Calif.-based Ticketmaster is the leading entertainment ticketing and marketing company.

The Justice Department told Prospect News earlier this week that it planned a thorough antitrust investigation of the deal.

In the all-stock merger, Ticketmaster shareholders will receive 1.384 shares of Live Nation stock for each share of Ticketmaster they hold.

Mentioned in this article:

Chemed Corp. NYSE: CHE

EchoStar Corp. Nasdaq: SATS

Liberty Media Corp. Nasdaq: LCAPA

Live Nation, Inc. NYSE: LYV

Sirius XM Radio Inc. Nasdaq: SIRI

Ticketmaster Entertainment, Inc. Nasdaq: TKTM

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