After gobbling up independent EDM promoters across the world, SFX’s chairman has unveiled a plan to gobble up SFX itself.
Just one month after clearing out the top echelon of the company’s executive staff, SFX Chairman Robert FX Sillerman has surprised Wall Street investors by announcing a plan to take the publicly traded festival promotions company (and the owner of Beatport) private again.
Investors responded with threats of a boardroom war after Sillerman’s offer to buy back all SFX stock which he does not already own at a price of $4.75 per share. Sillerman currently owns $39.8% of SFX stock, according to the company.
SFX only began public trading on Wall Street in October 2013. After opening at $13 a share, the company’s stock price has crashed and SFX has lost 70% of its valuation while missing analysts’ revenue expectations in each of the last four quarters. Following Sillerman’s announcement, the stock (which had been mired in the $3.50 range) rallied above $4.
Richard Tullo, an analyst at Albert Fried called Sillerman’s proposal “an insult” and suggested instead that SFX look for a buyer of the entire company (which most had hitherto believed was Sillerman’s plan).
The Wall Street Journal quotes Steven Azarbad, chief investment officer at Maglan Capital (which owns 1.5% of SFX) as preparing to do everything possible to rally the board against Sillerman’s offer.
The WSJ also notes that the bid may be an attempt to frighten investors away from shorting SFX stock. The downward spiral of the company’s stock price has attracted investors to short “about 30% of the shares not owned by Mr. Sillerman”, the Journal reports.
Our previous coverage: