'American Idol' Owner Faces Lawsuits Over Planned Sale
NEW YORK – American Idol owner CKx Inc. on Tuesday said it is dealing with several lawsuits that argue that the company in its recent agreement to be acquired by private equity firm Apollo Global Management for $511 million failed to secure a high enough price tag for its shareholders - or, as the company summarized in a regulatory filing, “to obtain fair consideration for CKx’s stockholders.”
In a regulatory filing, CKx, which through its 19 Entertainment also produces So You Think You Can Dance and also owns rights to the name and likeness of Elvis Presley and Muhammad Ali, mentioned that “three lawsuits have been initiated on behalf of a putative class of public stockholders of CKx.”
Apollo earlier this month offered $5.50 per CKx share, which the company said represented an approximately 40 percent premium over CKX's average closing price over the six months before the deal announcement and a 25 percent premium over the closing price of $4.45 on the day before the deal news.
Last year, one of several attempts to acquire the company had been exploring a price tag of $5.50-$5.75 per share for a majority stake in the firm. That bid was led by former chairman and CEO Robert Sillerman, who owns a 21 percent stake in the firm and has agreed to the sale to Apollo.
Bloomberg and others also reported last year that CKx had received a $600 million bid from an investor group led by Simon Fuller, the founder of 19 Entertainment and creator of the Idol TV series
Two of the lawsuits taking issue with the Apollo deal have been filed or initiated in the Court of Chancery of the State of Delaware, naming as defendants CKx, its current board members, Apollo and, in one case, Sillerman, according to the firm.
“The complaints allege, among other things, that certain defendants breached their fiduciary duties in connection with the offer, the merger and the other transactions contemplated by the merger agreement by failing to obtain fair consideration for CKx’s stockholders and approving terms in the merger agreement that are allegedly unfair to public stockholders,” Tuesday’s regulatory filing said.
Those two complaints seek, among other things, an order to enjoin the proposed deal, “a judgment directing the individual defendants to take all appropriate and necessary steps to maximize stockholder value.” One lawsuit also requests an order requiring the “disclosure of all material information necessary for CKx’s unaffiliated stockholders to make an informed decision whether to tender their common shares” in the proposed deal.
“CKx and the other defendants believe the plaintiffs’ allegations lack merit and will contest them vigorously,” the company emphasized in the filing.
The third lawsuit, which is similar, is pending in the Supreme Court of the State of New York, according to CKx.