The board of directors of CKX Entertainment, which among other things owns the “American Idol” franchise, has adopted a poison pill plan to block a proposed tender offer by a financial player aligned with CKX founder and former CEO Bob Sillerman. The board is opposing the offer because it would not seek to buy out all other shareholders.
Sillerman indicated in an SEC filing that he had written to the board urging it to endorse the offer by an unidentified third party. Combined with the 21.3% stake that Sillerman already owns, the proposed tender would total only slightly more than half of all CKX shares. The board said it would not be in the best interests of the company’s shareholders to accept a bid for less than 100% of all shares.
To prevent such an unwanted bid, the board has declared a dividend of preferred purchase rights which would grant shareholders (except for an unwanted suitor) an additional share for each one they own if someone acquires 15% or more of the company’s shares without board consent – or if anyone already holding more than 15% (such as Sillerman) increases their stake by 1% or more.
The board made it clear that it is not opposed to a buyout, but only if the buyer wants 100% of CKX’s shares. “The preferred share purchase rights are not intended to prevent or discourage a takeover and the Board of Directors would carefully consider a fully financed offer for all of the Company’s shares. The Board has the ability to redeem the rights and/or amend the Stockholders Rights Plan, including to permit an offer to purchase all of the Company’s shares,” it stated.
Indeed, another bid for 100% of CKX is already on the table. Sillerman’s former associate in the CKX executive suite, Simon Fuller, has made an offer which is reported to total $600 million to buy up all shares, or nearly $6.50 per share. The board has not yet taken any action on the Fuller bid.
In addition to the Idols television brand, with shows airing in more than 100 countries, CKX owns the rights to the name, image and likeness of both Elvis Presley and Muhammad Ali.