The troubled credit markets have killed the long-pending deal for Bob Sillerman and Simon Fuller to acquire most of assets of CKX Inc. for $12 per share. The move is hardly a surprise on Wall Street, where the stock has been trading at less than a third of that. Yes, there is a break-up fee, but since this is a Sillerman deal you will not be surprised to learn that he comes out of it smelling like a rose.
Way back in June – when we were just in a credit crunch, not a crisis – the board of CKX approved the offer by master dealmaker Sillerman and “American Idol” creator Fuller to buy out other shareholders for $1.3 billion. That would move CKX’s main assets – the rights to “American Idol” and the marketing rights to the name, likeness and image of both Elvis Presley and Muhammad Ali – to 19X, a company owned by Sillerman and Fuller. But CKX would continue, increasing its ownership of Sillerman’s FX Luxury Realty to 100%.
Fast forward through the economic deterioration that followed. The bid of $13.75 per share was reduced to $12.00 and has how been withdrawn. 19X has to pay a $37.5 million break-up fee.
But wait! This is a Bob Sillerman deal. Under the terms he negotiated, 19X is permitted to pay most of the break-up fee in CKX stock, with a stated value of $11.08 per share – way, way above the current trading price. So, 19X will return 3,339,350 shares of stock to CKX and pay $500,000 in cash.
This isn’t over, either. Sillerman and Fuller say they intend to pursue an “alternate transaction” to acquire CKX. No doubt the price will be a lot less than $12 per share.