According to reports on BizJournals – SFX Entertainment is currently exploring a fire sale of its assets, sources told the New York Business Journal.
The New York-based company, known for producing live events and festivals, overpaid for a number of properties it acquired over the years and “now the value has bottomed out,” one source noted. Between the inflated price tags of its M&A deals and a sliding stock price, the assets of SFX (NASDAQ: SFXE) could be made available at a huge discount.
CEO and founder Robert Sillerman, who founded the company in 2011, went on a two-year shopping spree, inking deals as a way of solidifying his position in the EDM space. In all, he’s estimated to have spent more than $1 billion on acquisitions. Among the assets it bought over the years that may be up for grabs include:
- Beatport, a music download website,
- Totem OneLove Group Pty Ltd., a producer of Australian electronic music festivals,
- ID&T, an Amsterdam-based producer of dance music festivals
- Flavorus, a ticketing company,
- Chicago-based React Presents,
- Monumental Productions BV, a company known for the Awakenings brand,
- A 50 percent stake in Alda Holding BV, a dance music event producer.
Shares of SFX fell 7.5 percent on Monday on the heels of reports that a downpour outside of Atlanta stranded many festival goers of one of SFX’s events. The TomorrowWorld festival, which took place over the weekend in Chattahoochee Hills, left SFX holding the bag regarding refunds and lost concessions from what was expected to be a major event with 190,000 people attending over the course of three days.
On the last day of the festival, Sunday, SFX announced that the festival would be accessible only to on-site campers and that it would refund the cost of that day’s tickets, which includes service, shipping and payment fees. The promoter also has to account for other costs, including parking, shuttles, lockers and the VIP upgrades. According to Billboard magazine: With transportation crippled, many unprepared festival-goers were left sleeping on the side of the road in wet conditions. Although the number of people affected is not known, various reports suggest thousands of people were left without accommodations. Inside the event, the promoter shuffled the lineup and closed four of nine stages.
As of Tuesday morning, SFX shares were up roughly 6 percent and trading at about 44 cents each. Its market cap hovers $45 million. The company’s troubles on the public market date back to its debut when investors banked on the popularity of EDM concerts and over valued the SFX stock. As a result, the company’s IPO failed to pop.
Earlier this year, SFX’s board was hoping to either finalize a take-private offer in May for Sillerman to buy the 62 percent of the company he didn’t already own for $5.25 a share or sell the company outright. The plan would offset net losses and negative cash flow. However, a go-shop period ended in July and Sillerman failed to meet an Aug. 13 deadline, leading to a tumble of the company’s stock. Meanwhile, law firm Glancy Prongay & Murray LLP is investigating potential claims on behalf of SFX investors regarding possible violations of federal securities laws in connection with Sillerman’s purchase of the company’s outstanding stock. Calls to SFX were not immediately returned. New York Business Journal will keep you updated as we learn more.