Liberty Interactive Corp. (NASDAQ: QVCA, QVCB, LVNTA, LVNTB) has developed deep roots throughout the video and digital commerce industries, having grown into one of the largest and most well-known players in the game today on the strength of its two core tracking stock groups, QVC Group (QVCA, QVCB) and Liberty Ventures Group (LVNTA, LVNTB). QVC, as readers likely already know, is one of the top global names in video and digital retailing, with its curated collections of brands. QVC Group also owns a sizeable stake in interactive multi-channel retailer HSN (NASDAQ: HSNI) at around 38 percent, as well as wholly owning boutique experience focused pure-play ecommerce retailer, zulily.
Liberty Ventures Group holds the company’s subsidiaries such as leading internet retailer of sports, fitness and dietary supplements, Bodybuilding.com, as well as cloud-based ecommerce fulfillment and marketing platform CommerceHub, and the popular online event planning engine Evite. The company recently announced details of its CommerceHub spin-off into CH Parent, with news that Series A and Series B Liberty Ventures common stock holders will receive 0.1 and 0.2 shares of CH Parent common and Series C stock (respectively) as part of a distribution, with trading being carried out via the Nasdaq Global Select Market under the tickers “CHUBA” and “CHUBK,” as CH Parent Series B common stock trades as “CHUBB” via OTC Markets (starting July 25).
Liberty Ventures Group is also responsible for the company’s major interests in Expedia (NASDAQ: EXPE), where it owns 16 percent of common stock, as well as Liberty Broadband Corp. (NASDAQ: LBRDA, LBRDK), which holds interests in Charter Communications (NASDAQ: CHTR) and custom geolocation solutions provider, TruePosition (24 percent each). The company also controls minor ownership positions in alternative lodging provider Interval Leisure Group (NASDAQ: IILG) at 13 percent ownership, online consumer loan marketplace developer LendingTree (NASDAQ: TREE) at around 23 percent, world-renowned floral and gifting company FTD (NASDAQ: FTD) at around 37 percent, as well as having a small stake in Time Warner (NYSE: TWX).
The recent completion of a $2.4 billion cash on hand investment in Liberty Broadband Corp., in conjunction with the May 18 merger of legacy Charter Communications and Time Warner Cable (linked with the Bright House Networks absorption), makes the company even more of a contender in this space. Having traded in shares of Time Warner common stock for New Charter Class A common stock (some 5.385 million) and having acquired newly-issued shares of Liberty Broadband Series C common stock (some 42.681 million) at the same fixed price as other third party investors (who invested on the same terms), Liberty Interactive has successfully executed a well-funded $5 billion acquisition program of the new public parent company, known as New Charter.
Post refinancing of wholly-owned subsidiary QVC’s senior secured credit facility back in June, which extended the cap to $2.65 billion via a multi-currency facility offering better overall interest rates, the company subsequently announced two interest payment and excess regular cash dividends. The first, at the end of June, saw a quarterly interest payment to one percent Senior Exchangeable Debenture (due 2043) holders at the rate of $2.50 per $1,000 of original principal. The targeted annualized yield of one percent of the adjusted principal was effected in part by a single extraordinary distribution made in March to Debenture holders at a rate of $134.58 per $1,000 original principal, subsequent to the HSN special cash dividend in February of $10.00 per share. Liberty also issued an additional distribution at a rate of $2.2879 per Debenture not resulting in a reduction to the principal amount, due to HSN’s payment of its portion of the quarterly dividend (over $0.18 per share).
The latest payment and dividend from Liberty Interactive, a semi-annual interest payment announced on July 15 to holders of its 3.5 percent Senior Exchangeable Debentures (due 2031), at a rate of $17.50 per $1,000 original principal, should also be understood in light of similar extraordinary distribution adjustments. There have been two thus far in this case, one way back in early 2007 at a rate of $162.6160 per $1,000 original principal associated with the going-private transaction of Freescale Semiconductor, and another in 2012 at $184.0960 per $1,000 original principal, arising from Google’s (NASDAQ: GOOG, GOOGL) $12.5 billion acquisition of Motorola Mobility Holdings. Once again the company generously conferred upon Debenture holders an excess regular cash dividend of $1.3675 per Debenture, derived from the quarterly dividends paid by Motorola Solutions (NYSE: MSI).
This is the very portrait of a shrewd sector operator that is dedicated to enriching its investors. This year, the U.S. ecommerce market came in as the second largest on earth and projections indicate that it will continue to take up more and more of the roughly $5 trillion retail sales space here in the U.S. as time moves on. As the now $75 billion plus mcommerce segment of the ecommerce market in particular heats up, video will play an increasingly dominant role, and as ecommerce approaches estimates of some $482 billion by 2018, well-positioned digital and video retail powerhouses like Liberty Interactive will continue to shine.
If you want to take a closer look at the company, visit www.libertyinteractive.com
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