Board OKs private time for CKX
Stock soars as Sillerman, Fuller set $1.3 bil buyoutCKX Inc. chairman and CEO Robert F.X. Sillerman and "American Idol" creator Simon Fuller are set to take CKX private after its board approved a $1.3 billion, or $13.75-per-share, cash buyout and related transactions.
Friday's board move boosted shares of the company that owns the rights to such cultural icons as Elvis Presley, Muhammad Ali, David Beckham and "Idol" to a 52-week high. The stock closed the session up 37.8% at $14.65.
In addition to the buyout, for every share of CKX, shareholders will receive one share of the Sillerman-affiliated real estate firm FX Luxury Realty, in which CKX on Friday acquired 50% for $100 million in cash and which will look to develop attractions based on Presley and Ali in Las Vegas, Memphis and cities worldwide under a newly struck licensing arrangement.
Sillerman said in an interview Friday that the deal also will free up the new company, 19X, to do deals with content creators and cultural icons who in the past wouldn't sign arrangements because of the disclosure requirements of public companies.
Sillerman said Friday that the deals are designed to create a new public company that can pursue capital-intense real estate projects while also allowing shareholders to get a cash payout and a chance to stay invested in the real estate firm.
While most observers expect the transaction to go through, there is a 45-day window for alternative bids, CKX said.
The cash portion of the buyout price represents a 29% premium over CKX's Thursday closing price of $10.63. Sillerman and Fuller, who is a CKX director and the CEO of its 19 Entertainment Ltd. unit that owns "Idol," said they would fund the deal through a combination of equity and debt financing, with the two executives and unnamed other senior company managers "providing a substantial portion of the equity commitment."
"After two successful years of developing and exploiting the assets we have acquired, during which time we have seen tremendous year-over-year growth, we have come to realize that there is a substantial opportunity to capitalize on the Elvis Presley and Muhammad Ali assets in real estate and location-based attractions," Sillerman said.
However, he said that "the pursuit of these opportunities would require a significant investment of capital, which could hinder our ability to grow the core area of our business and which is not consistent with the business plan."
He hopes for a "flurry of activity" in terms of deals with content creators/icons who in the past opted out of deal talks at the last second as the publicly traded CKX would have had to "disclose more of their lives ad finances" than they wanted.
Sillerman said in the interview that master plans for a development in Memphis — including three hotels and an entertainment complex with an amphitheater — already have been submitted.
FX Luxury owns land in Las Vegas and plans to pursue an Elvis Presley hotel and casino project along with commercial and residential developments. And talks are under way with about a dozen other locations around the world, Sillerman added.
Fuller said he is "looking forward so much to continuing to work with Bob building the amazing assets that we have in 'Idol,' Elvis Presley, Muhammad Ali and the Beckhams."