Sirius XM Radio Inc., the largest U.S. satellite-radio broadcaster, rose the most in more than a month in New York trading, on speculation John Malone’s Liberty Media Corp. will increase its stake and spin it off.
Sirius advanced 4.5 percent to $2.31 at the close, the largest one-day gain since Feb. 24.
Liberty, based in Englewood, Colorado, owns preferred stock convertible into about 40 percent of the common shares of New York-based Sirius. Speculation about a stake increase intensified after Liberty asked U.S. regulators this month for permission to gain majority control of Sirius, said Brett Harriss, a Gabelli & Co. analyst in Rye, New York. He has a hold rating on Sirius.
“There’s speculation they will increase their stake to go from 40 percent to 51 percent and then divest the stake,” Harriss said.
Liberty Media could avoid paying taxes on a spinoff of Sirius if it increases its stake to 50 percent or more, according to U.S. Internal Revenue Service rules, Harriss said.
A standstill agreement between the companies concluded this month, allowing Liberty to buy more shares of Sirius, Harriss said. Liberty asked the Federal Communications Commission for consent to take de facto control of Sirius, in a filing dated March 20.
Sirius today asked the FCC to dismiss Liberty’s application for control in a filing, saying the majority of the Sirius board of directors and its management dispute Liberty’s assertions.
A Sirius spokesman, Patrick Reilly, and Liberty Media spokeswoman, Courtnee Ulrich, didn’t return calls seeking comment.
Sirius has gained 35 percent in the past 12 months. In 2009, the company averted bankruptcy after Liberty agreed to buy a 40 percent stake in exchange for $530 million in loans.
Liberty Media rose 1.5 percent to $88.15 and has gained 18 percent in the past 12 months.