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Sillerman fails to finance SFX buy-back bid, opening a new seven week window for alternative proposals

By | Published on Monday 17 August 2015


Robert Sillerman has failed to secure enough finance to take his company, SFX Entertainment, back into private ownership, at least in accordance with Plan A.

As previously reported, Sillerman announced earlier this year his intention to take the EDM powerhouse back into private ownership – having only floated it in 2013 – eventually agreeing to offer other shareholders $5.25 per share. But doubts then began to circulate that the SFX founder would ever be able to secure enough financial backing to buy back the more than two thirds of the company no longer in his control on those terms.

Ironically, all the insecurity that speculation created sent the SFX share price plummeting, making Sillerman’s $5.25 offer all the more generous, but at the same time all the more unrealistic. Some weird goings on with additional shares being sold and then bought back, coupled with all the hoo and the haa surrounding SFX subsidiary Beatport temporarily telling labels it couldn’t pay them their quarter two royalties because of Sillerman’s buy back ambitions, only furthered concerns about the music firm, and ensured its share price continued to wobble.

Other buyers for the company – which primarily operates EDM festivals and events, in addition to Beatport and a handful of other digital and brand partnership operations – were previously sought by the special committee after it accepted Sillerman’s $5.25 per share offer, to ensure shareholders were getting the best possible deal.

No rival bidders for the entire company came forward, though there was seemingly some interest in buying some SFX assets rather than the company outright. And now the price for acquiring the whole of SFX will presumably come down, given the current share price, rival bids for the whole business could as yet appear on the horizon.

SFX said on Friday: “Our special committee of independent directors, with the concurrence of Robert FX Sillerman, the company’s Chairman and Chief Executive Officer, has authorised the continued exploration of strategic alternatives for the company, including the sale of all or substantially all of the company’s assets in whole or in part”.

It went on: “The special committee and its advisors will entertain offers for the entire company as well as assets not central to the company’s core business through at least October 2, 2015. Sillerman has agreed to cooperate with the special committee to obtain the best available offer for the company’s shareholders”.

October has been set as a deadline for new bids, the company added, “to allow potential bidders and their financing sources to have visibility into the company’s performance during its peak festival season, thus providing a full and accurate picture of the company’s results and prospects”. Though that extra seven week window will also allow plenty more speculation about how, exactly, Sillerman’s great EDM experiment has really performed.