Liberty Media (NDAQ:LCAPA) announced a special shareholder meeting last week set to take place on October 23rd to discuss and vote on a proposed breakup of the company brought to shareholder attention several months ago. Management is hoping that the breakup will help the company unlock value for shareholders, according to a recent S-4 filing with the SEC.

The proposed breakup would divide the company into two operating segements. Liberty Entertainment would receive Starz Entertainment and FUN Technologies as well as equity interests in GSN and WildBlue. The segment would also receive a $588 million cash payout resulting from the company's pending sale of DirectTV to News Corp in exchance for taking on $551 million in publicly traded debt. Liberty Capital - the other segment - would receive the rest of the company's current assets and subsidiaries.

"The reclassification proposals are intended to provide us with greater flexibility with regard to making acquisitions and raising capital, by allowing us to use equity securities relating to the Entertainment Group and its more focused group of businesses and assets," said Liberty Media in a statement. "We also believe implementation of the reclassification will further clarify our capital structure and result in greater market recognition of the value of both the Capital Group and the Entertainment Group, thereby enhancing stockholder value over the long term."

In the end, this deal could provide shareholders with great returns that come as a result of value being unlocked from undervalued assets. Spin-offs also tend to outperform the overall market in their first two years of being a public company, so shareholders can also look forward to statistics working on their side. Combined, these factors make LCAPA a stock worth watching!

Related Companies
News Corp (NWS)
Time Warner (TWX)
Viacom (VIA)