Live Nation has moved to terminate its pending deal to acquire Latin American concert promoter OCESA Entretenimiento, saying the parties have been unable to agree on modified terms.
“Live Nation has commenced binding arbitration proceedings, seated in New York, New York, before the International Court of Arbitration of the International Chamber of Commerce, seeking a declaratory judgment that it has properly terminated the CIE Purchase Agreement and that any obligations thereunder are excused on the grounds set forth above, among others,” the company said in a May 25 8-K filing. “Live Nation anticipates that CIE will defend these arbitration proceedings and that both CIE and TV may pursue any legal remedies available to them to enforce the terms of their respective Purchase Agreements and contest the validity of their termination.”
It was announced in July 2019 that Live Nation would acquire the company, which is also owner of Ticketmaster Mexico, from parent companies CIE and Grupo Televisa, the largest multimedia company in the Spanish-speaking world. OCESA/CIE was 2019’s No. 3 promoter based on ticket sales reported to Pollstar, with more than 4.6 million reported and $240 million grossed.
The deal followed Live Nation’s acquisition of Argentina-based DF Entertainment in late 2018.
During Live Nation’s first-quarter earnings report in early May, CEO and President Michael Rapino had said “we are, long term, still bullish on (OCESA’s) business and ours. … We want to be in business with OCESA and get the deal done.” But he added, “I’m not looking to take on any losses from Mexico while they’re going through their six or eight months of business downturn.”
ts in January of 2019.
The news of the intent to terminate the deal comes as Live Nation has implemented wide-ranging cost-cutting measures to help weather the coronavirus storm, including with furloughs at Ticketmaster, pay cuts for top execs including CEO and President Michael Rapino. The company posted a first-quarter loss of $184.8 million in its first COVID-19-impacted quarter.
However, with the cost cutting measures and by boosting liquidity, president Joe Berchtold told CNBC’s “Squawk Alley” the company had the cash reserves to withstand a prolonged shutdown well into next year if necessary.
LYV stock was up sharply on the news, with the company’s share price just under $50, up from a low of under $30 in mid-March.