SFX Up For Grabs

SFX Entertainment announced Aug. 14 that it has authorized 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.”

The announcement came 24 hours after a deadline for CEO Robert Sillerman to disclose financing for his tender offer of $5.25 per share to take SFX private. Instead, it appears SFX may spin off parts of its business, which includes Beatport and a number of major EDM festivals.

The Nasdaq reaction was immediate. Shares fell to a low of $1.38 just before the announcement was released, but within 15 minutes rose to $1.70 with a volume of 2.75 million. The bounce didn’t last long; by the end of trading Aug. 14, the share price had dropped back to $1.39, on volume of 4.16 million shares traded.

SFX also revealed it has “received an indication of interest at a price lower than the $5.25 per share offered by Sillerman,” who “continues to be interested in taking the Company private, either alone or with one or more strategic partners.”

His interest would also be at a lower price than his original offer. Offers will continue to be entertained for all of SFX as well as “assets not central to the Company’s core business” through at least Oct. 2. “The Oct. 2 date was chosen to allow potential bidders to 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,” according to the statement.

“To facilitate potential offers during this period, all ‘no-shop’ restrictions and the related breakup fees provisions applicable to the Company under the merger agreement will no longer apply, enabling potential bidders to freely evaluate the Company in light of the recent substantial decline in its share price. Any new transaction will be evidenced by a new definitive agreement as the existing merger agreement is no longer effective.”