Sirius XM holders vote for privatization

Shareholders voted in favour of a proposal to take satellite radio business Sirius XM Canada Holdings Inc. private at a special meeting Tuesday, following weeks of objections from minority shareholders concerned that investors are getting shortchanged in the deal.

First announced in May, the offer of $ 4.50 per share in cash or stock is subject to a complaint by some minority shareholders at the Ontario Securities Commission, but nevertheless obtained the support of 89.14 per cent of combined Class A and B shareholders, as well as nearly 65.91 per cent of minority shareholders.

Pending court and CRTC approval, the proposal will see two of Sirius XM Canada’s largest shareholders — Slaight Communications Inc. and Obelysk Media Inc., owned by Canadian businessman John Bitove — acquire 33.5 per cent of voting shares and 15 per cent of the company’s total equity.

Sirius XM Holdings Inc., the American satellite radio business that has the rights to the Sirius XM brand in the U. S. and a 32 per cent stake in its Canadian counterpart, would acquire rest of the equity. The deal may also help to smooth over a longstanding squabble between the Canadian and U. S. Sirius companies over distribution and royalty fees going back a decade.

The Canadian Broadcasting Corporation, which holds a 12.5- per- cent stake in Sirius XM Canada, plans to sell at $4.50 a share. Other minority shareholders have complained that the CBC should not be allowed to vote on the proposed transaction because it stands to benefit from existing broadcast deals it has with the satellite radio provider.

Those minority shareholders can now also accept $ 4.50 per share in cash, or they can take shares in the U.S. Sirius XM Holdings.

Sirius XM Canada stocks were trading at $ 4.65 on the Toronto Stock Exchange Tuesday morning at the time that the approval of the privatization proposal was announced. The stock closed at $4.70 in Toronto, up 1.73 per cent on the day.

“The deal offers a premium price, certainty of value and the option to remain invested in the North American satellite market,” said Tony Viner, chairman of Sirius XM Canada’s Board, at the special meeting of shareholders.

In July, concerns that the privatization deal was undervaluing the company were bolstered when Sirius XM Canada reported rather rosy third- quarter earnings, including an $86 million, or 3.5 per cent, increase in revenue and a 3.5 per cent increase of total subscribers to 2.75 million.

“It’s inappropriate and completely nonsense that we would see this type of bid,” said Paul Gardner, a partner at Avenue Investment Management, whose firm is among Sirius XM Canada’s most significant shareholders, in an interview with the Financial Post earlier this year.

Benoît Durand, senior portfolio manager at Van Berkom and Associates Inc., another one of Sirius XM Canada’s leading shareholders, added: “We have a fiduciary duty to our clients to maximize their investment. Obviously here, this is not happening.”