Sirius XM Radio Inc., the satellite-radio broadcaster, said it will issue a special dividend of 5 cents a share and repurchase as much as $2 billion in stock.
The special cash payout is payable Dec. 28 to stockholders of record as of Dec. 18, the company said today in a statement.
Sirius joins a growing number of companies paying special dividends or accelerating payments ahead of a potential U.S. tax increase next year. The total amount of the Sirius cash dividend is expected to be about $325 million, according to the New York-based company’s statement.
“The size of the capital return and the mix in favor of buybacks is roughly in line with our expectations, although the timing is slightly in advance of our forecasts,” James Ratcliffe, an analyst at Barclays Plc., said in a note to clients. Ratcliffe, who rates the shares the equivalent of hold, said he expected buybacks to be announced in January 2013.
“The desire to get the dividend in before a rise in dividend tax rates in 2013 drove the earlier announcement,” he said.
Liberty Media Corp., which owns about 49.8 percent of the company’s stock, will participate in the Sirius buyback program, the radio broadcaster said. Liberty will probably gain majority control of Sirius, pending Federal Communications Commission approval, in mid-January, Ratcliffe said.
The buybacks will be funded by cash on hand, future cash flow from operations, and borrowings under an existing revolving credit facility, according to the statement. Sirius plans to purchase stock “from time to time on the open market and in privately negotiated transactions,” the company said.
Sirius rose less than 1 percent to $2.79 at the close in New York. The shares have gained 53 percent this year.