Dec 12 (Reuters) - Liberty Media said on Tuesday it would combine its business that holds a majority stake in SiriusXM with the rest of the radio company to create a new publicly listed firm with a simplified ownership structure.

The move was first proposed by billionaire John Malone's media conglomerate in September.

Under the deal, former investors in Liberty SiriusXM Group or LSXM — the conglomerate's tracking group for the radio company's stock — would own 81% of the new company, while minority shareholders of SiriusXM would own the rest.

A tracking stock depends on the financial performance of the segment of the business it "tracks", which refers to SiriusXM here. They trade separately from the parent company's stock.

"This combination will create value for all stockholders by eliminating the tracking stock structure, enhancing liquidity and allowing former LSXM stockholders to participate directly in the ongoing performance of SiriusXM," Liberty Media CEO Greg Maffei said.

Liberty Media also has tracking groups for its interest in Formula One.

Shares of SiriusXM, which competes with streaming service providers such as Spotify, were down 0.4% in premarket trading, while LSXM rose 5.1%. (Reporting by Harshita Mary Varghese; Editing by Shilpi Majumdar)