Liberty Sirius XM shares are set to be combined with those of Sirius XM Holdings in a deal set to close Monday—and it could hand investors a 5% return.

Liberty Sirius XM stockholders are due to get 0.8375 shares of newly issued Sirius XM stock for each of their shares after a one-for-10 reverse stock split on Monday.
Investors stand to get about $24.50 a share in Sirius XM stock for each Liberty Sirius XM share—for a 5% return relative to the current price of Liberty Sirius XM—before the effect of the reserve stock split. Put another way, investors can gain Sirius XM stock for about $2.78 a share, which is a discount to the current price.
Berkshire Hathaway is the largest holder of Liberty Sirius XM, which is a tracking stock issued by Liberty Media. It holds more than 30% and should own about 25% of Sirius XM after the combination.
John Malone, the controlling Liberty Media shareholder, has long sought this transaction as a way to simplify the structure of the two companies and eliminate the big discount at which the tracking stock traded relative to Sirius XM, the satellite radio company.
What’s Next: Liberty Sirius stock could reflect the true value of Sirius XM, but analysts and investors will be interested to see how Sirius XM trades after the deal when the float will increase sharply and allow for a better assessment of the stock, which is off nearly 50% this year.

—Andrew Bary

—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner