Liberty Media to boost Live Nation stake
Company eyes 34.9%, currently owns 14.6%NEW YORK -- Shares of Live Nation Entertainment soared to a 52-week high and finished up 15.6% on Tuesday after John Malone's Liberty Media said it plans to more than double its stake in the newly merged live events and ticket giant as an investment play.
The move shows that Liberty believes that the stock has upside, just like some on Wall Street have argued.
It will also once again make Malone a major shareholder in a company that Barry Diller is involved in. Diller serves as chairman of Live Nation. The two moguls had a legal showdown over Liberty's stake in IAC and its successor businesses after a split-off.
A day after Live Nation and Ticketmaster closed their long-reviewed merger, Liberty said it plans to raise boost its stake from 14.6% to around 34.9%. It will launch a partial tender offer for up to 34.5 million shares of Live Nation for $12 each, a premium of about 14.2% over Monday's closing price.
Liberty got its stake in Live Nation in exchange for its holding in Ticketmaster, where it was the largest shareholder. Under a stockholder agreement with Live Nation, Liberty can acquire up to 35% of the company.
Live Nation shares closed at $12.15 -- above the price Liberty plans to pay -- after hitting a 52-week high of $12.36 intra-day.
In an appearance on CNBC, Liberty CEO Greg Maffei cited growth opportunities in the ticketing space as a key driver for Liberty's tender, which is expected to launch in the coming days.
The Malone company also said Tuesday that it plans to attribute any Live Nation it acquires in the move to its Liberty Capital business. Its current Live Nation holding is held by Liberty Interactive.
Miller Tabak analyst David Joyce has a "buy" rating on Live Nation and a short-term price target of $12, plus a long-term target of $18-plus.
"This merger could finally enable smoother dynamic pricing, thereby giving consumers greater choice of seat prices, which in turn would help Live Nation Entertainment improve attendance, ancillary revenue, and financial returns," Joyce said about the now closed Ticketmaster deal in a report.
Thomas Weisel Partners analyst Ben Mogil is also high on Live Nation with an "overweight" rating and a new $13.50 price target.
"We continue to favor the combined entity as the macro environment for discretionary spending continues to show signs of optimism while the deal will accelerate new initiatives such as dynamic ticket pricing," he said.
"The larger combined market capitalization of the entity will also likely attract a wide swath of an investor audience."