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SFX extends deadline for acquisition offers

By | Published on Friday 2 October 2015


EDM powerhouse SFX has extended the deadline for people wanting to bid for some or all of the flagging company. This follows further declines in its share price and rumours that the firm’s “strategic review” was close to becoming a fire sale.

As previously reported, when the dance music firm admitted back in August that founder Robert FX Sillerman had failed to secure financial backing for his plan to buy back all the shares in the company he doesn’t currently control – so to take the business back into private ownership – the SFX board said it would now be considering other possible bids for some or all of the business until today, 2 Oct.

Earlier in the year, when Sillerman first announced his buy-back plan, SFX set up a committee of independent directors to consider both his proposal and any other competing offers for the business. It concluded that Sillerman’s proposal was fair, and then reported that no other serious offers for the company had been made. But by this point the SFX share price had dropped so significantly, Sillerman’s original offer to other investors of $5.25 per share became totally unrealistic.

It was assumed that Sillerman would come up with a new proposal to take back control of SFX by today’s deadline. As for other offers, it was thought that there would be more interest in parts of the business rather than the entity as a whole. The independent directors had confirmed they’d consider such proposals, though initially indicated they only wanted to sell off periphery rather than core assets. That may now no longer be a restriction.

Since the 2 Oct deadline was announced, there have been other challenges for SFX, with at least two US legal firms investigating whether there is a case for the company’s shareholders to sue over the handling of Sillerman’s buy-back proposal, while speculation has continued over the state of its finances. Though last month bosses announced they had secured $90 million in new financing.

Announcing yesterday that it was extending the deadline for offers to buy the company or its assets, SFX said that the extension was “an attempt to give all parties sufficient time to complete their due diligence review following events occurring in September 2015, including the closing of the company’s financing transactions on 17 Sep 2015 and the conclusion of the fall festival season. The committee will finalise the bidding process as expediently as possible”.

Meanwhile the company added that Sillerman himself had committed to back the decision of the independent directors regarding the future of his business, noting that: “Pursuant to a voting agreement between Sillerman and his affiliates and the company, Sillerman has agreed to vote all shares beneficially owned by him in favour of a transaction involving the sale of the company that is recommended by the special committee”.

It went on: “Such voting agreement terminates on 31 Dec 2015, provided that if the company enters into a definitive agreement prior to such date, subject to terms and conditions as set forth in the voting agreement, Sillerman will vote in favour of the recommended transaction following the execution of such definitive agreement”.