SFX Sets IPO Terms; Puts Market Value at $1.1 Billion

Electric Zoo Festival - H - 2013
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Among the details filed by the electronic dance music promotions company with the Security Stock Exchange is that recent fatalities at the Electric Zoo festival are noted as "risk factors."

SFX Entertainment, the electronic dance music promotions company founded in 2011, filed details on Wednesday with the Securities and Exchange Commission regarding its initial public stock offering, which put the company’s market value at $1.1 billion dollars.

The plan calls for the company to raise $200 million by offering 16.7 million shares at a price range of $11 to $13.

SFX, which is owned by Robert F. X. Sillerman, has acquired or invested in a number of national and international dance music related companies, after Sillerman announced last June that he would spend $1 billion in acquiring EDM entities.

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His buying spree has included Disco Donnie Presents, Life in Color, Voodoo Experience and ID&T, recognized as the largest dance-event promoter in the world. In February, SFX acquired Denver-based Beatport for $50 million, its first multimedia pick-up. The company also invested in Made Events, which produces the Electric Zoo festival on Randall’s Island (70% stake valued at $30 million according to a previous SEC filing); Australian event promoter Totem OneLove, which produces the Stereosonic festival ($55.3 million for a total buyout); iMotion, a German event promoter; May Day festivals (60% valued at $12 million); and an 80% stake in Miami nightclub operators MMG for $16.9 million.

As noted in the Securities Exchange Commission document, however, these acquisitions are listed as "probable" and their "consummation remains subject to closing conditions."

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Under "Risk Factors" in the filing, SFX mentioned the recent fatalities at the Electric Zoo festival. "For example, the third day of the 2013 Electric Zoo festival this year was canceled after the event suffered two fatalities, which the media reported to have been related to drug use by the individuals, during the first two days of the festival. Electric Zoo is produced by Made, and we plan to acquire 70% of the ownership interests in Made shortly after the closing of this offering, and the remaining 30% in 2018. See 'Business—Our Principal Assets—Made.' These consequences may also make it more difficult for us to obtain or retain sponsorships, lower consumer demand for our events, subject us to liability claims, divert management's attention from our business, and make an investment in our securities unattractive to current and potential investors. These outcomes could have the effect of lowering our revenue profitability and/or our stock price."

According to NASDAQ, SFX Entertainment had $185 million in sales (pro forma for acquisitions) for the year ending June 30, 2013. The company filed confidentially on November 13, 2012. UBS Investment Bank, Jefferies, and Deutsche Bank are the joint book runners on the deal.

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