AEG Bidding Tightens

The only thing about the sale that doesn’t seem subject to debate is that the bidding process should be concluded in March. But even “insiders” – depending on the publication – seem unable to leak consistent information about who’s still in the bidding, whether the company will survive intact or even whether Phil Anschutz’s target price will be met.

Guggenheim Partners is out and Colony Capital is in, according to Bloomberg. Guggenheim Partners is in, according to Variety. And both are in, according to Reuters.

Guggenheim, which last year purchased the Los Angeles Dodgers for roughly $2 billion, was considered a front-runner.

That characterization is in question, with reports the private equity firm has decided to take a pass. Colony Capital seems the betting favorite at press time, with pharma billionaire Patrick Soon-Shiong believed to also be in the running in the second round of bidding.

A Colony winning bid could provide a bit of irony, as Michael Jackson’s Neverland Ranch is among the company’s real estate pickups. AEG is accused by Jackson’s mother and children of negligence in the hiring of Conrad Murray as MJ’s personal physician before his 2009 death.  Colony is also a part owner of Miramax film company and its library.

When the sale was first made public, a floor for bidding was floated at around $10 billion. After all, that’s a lot of real estate and sports teams. In addition to arenas and entertainment centers like Staples Center and L.A. Live, AEG owns soccer-specific stadiums as well as interest in pro teams including the NBA’s Lakers and NHL’s Kings. It also owns cycling’s Amgen Tour of California.

And, according to AEG, the buyer would have to agree to buy the full platform, lock stock and barrel, as well as agree to keep the executive team, including president/CEO Tim Leiweke, in place.

With reports that bids are coming in at below the preferred sale price, speculation is heating up that Anschutz may have no choice but to hive off units if he expects to make that $10 billion nut.

And if one entity steps up with the cash for the whole kit and caboodle, it will be buying at a price that sources tell the Wall Street Journal is well beyond the company’s earnings.

It’s hard, if not impossible, to verify that tidbit as AEG is notoriously tightly held, and Anschutz is famous for playing close to the vest in his business dealings. But sources who say they have reviewed the company’s financials told the WSJ that EBITDA stands at about $350 million for the most recent year – suggesting a value of less than $5 billion.

The AEG sale, brokered by Blackstone Group, is said to still be on track but if the bids just don’t meet expectations – and Anschutz sticks to his guns about not breaking up the company – could yet be taken off the table.