News - 26/02/2015

SFX CEO announces his proposal to take the company private

SFX CEO announces his proposal to take the company private

Shares of EDM-focused group SFX Entertainment closed 29.46% higher yesterday after the CEO of the company Robert Sillerman laid out his plans to buy out all outstanding shares for $4.75 each. 

The offer represents a 44% premium over the closing price of the shares on Monday and even though this is generous, the company’s overall performance has disappointed investors and will leave many questioning whether the proposed price per share is high enough.

Sillerman stated that: 

"Given the inherent risks in our business, my offer guarantees a substantial premium to current price. Those shareholders who are interested in remaining as investors in the company alongside me will have the ability to elect to keep all or part of their shares."

When SFX went public in October 2013 the shares started out at $11.90, a high they never touched again. In the subsequent year and a half SFX shares have reached a low of $3.29 on the 30th of January. 

In addition to fears about the long-term prospects business itself, shareholders have also been concerned with Sillerman’s behaviour after a number of statements and photos led to one analyst questioning his sanity during an earnings call.

At the same time, Forbes reports that Maglan Capital, owner of around 1.5% of the company’s outstanding stock, believes that the company is worth over $10 per share and that the offer is a low-ball one. These sentiments are echoed by Albert Fried analyst Richard Tullo who called the offer an insult to investors. 

For now, the company’s board will have to review the offer, but there are likely to be many more more twists and turns ahead before a decision is made on taking it private. 

 

(Andrea Leonelli) 

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