Live nation and Ticketmaster agree to merge. Complete announced terms. Consolidated financials. Soundbytes.

Terms Announced: Live Nation and Ticketmaster Merger

Seth Gilbert, 02-10-2009

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merger signed by board It’s now official. I’s dotted and T’s crossed on the plan. Live Nation and Ticketmaster have agreed to merge. The official press release (PDF) was issued this morning. Substantiating the early reports , here are the facts from the press releases and conference call:

• The companies will combine in a tax free, all stock merger with a combined enterprise value estimated at $2.5b.

• Ticketmaster will receive 1.384 shares of Live Nation for each share of Ticketmaster they own. Pro -Forma, Live Nation shareholders will hold 49.99% of the new company. Ticketmaster will hold 50.01%.

• The new company expects it will save approximately $40m per year in cost efficiencies resulting from the overlap. This savings should be reached within the first year. On a pro-forma balance sheet combination (click thumbnail), based on Sept 2008 results, the company would have cash of $750m and Free Cash of $239m. Total Debt would be $1.667b. Market cap would be $816m.

• The management component of the new company will include as clients Madonna, Jay-Z, Shakira, Christina Aguilera, Aerosmith, Guns N Roses, the Eagles and 200 more. More than 280m tickets will be processed annually, of that, more than 140 million will be sold. The gross value of these transactions would be $8.3b, $6b of which is derived online.

• Promotions will be carried at more than 47 amphitheaters, 11 House of Blues venues, 46 clubs and more than 30 Festivals. They company will represent more than 11,000 venues in twenty countries.

• Organizationally, as reported, Barry Diller will be the new company’s Chairman. Michael Rapino will be its CEO and President. Irving Azoff will be Executive Chairman and CEO of Front Line, its artist management group. 7 directors from each company will sit on a fourteen person board of directors. Liberty will have the right to name two of Ticketmaster’s directors so long as it continues to own a stake above 5%.

• The companies will operate independently until a transaction is completed. In addition to shareholder approval, the deal will also require the approval of Ticketmaster’s bank Lenders and the successful completion of a regulatory review. The companies optimistically expect the closing will happen by the 2nd half of 2009. Shareholder voting is targeted at 2 to 4 months. Time for lender consent is expected at 8 weeks or less.

• Goldman Sachs acted as an adviser to Live Nation. JP Morgan advised Ticketmaster. Deutsche Bank delivered a fairness opinion.

•The companies’ believe the merger will give them the resources to improve ticketing options (ticketless options, mobile tickets and probably more direct-to-fan options.)

•Regarding 360 Deals – More 360 artist deals could happen but will be considered “on a case by case by basis.”

•Regarding Live Nation’s CTS Eventim Partnership -We are “looking to honor and work through our CTS Relationship.”

•Issues with existing Ticketmaster debt? — There are no change of control provisions to be triggered in either company’s credit facilities. “There’s been no discussion with any lenders at this point.”

Statements from Key Executives

Barry Diller
In a conference call, Barry Diller spoke of the desire to join the companies for several years. The combination of the economy, and agreements between Irving Azoff and Michael Rapino made it possible now. Speaking out regarding ticket pricing, and recent issues, he attempted to clarify roles noting that, “Ticketmaster does not set prices. Live Nation does not set ticket prices. Artists set prices. Everyone else is just a distributor or service provider to artists and content owners. Also, while there is much confusion about the primary and secondary market for ticketing, both markets do exist. Ticketmaster’s efforts to engage in secondary ticketing are designed to make a more transparent and secure marketplace for those kinds of transactions.”

Irving Azoff
“More seating choices, better price flexibility, broader event promotions and more creativity in marketing and merchandizing will all result from bringing these two great companies together. We need to develop more effective methods to package, price and market live entertainment and that is exactly what this merger delivers. By making an even greater investment in technology we can enhance our ticketing platforms to provide even more options like paperless ticketing and better access for fans. .. this merger will create a pipeline for all rights holders to reach their consumers.”

“There is nothing more magical than the bond and the intimate relationship of fans to artists. It is truly an experience that needs to be embraced and nurtured with both integrity and respect. One of the mandates of the combined company will be to develop that bond to unsurpassed levels. Additionally, the Live Nation and Ticketmaster relationship will allow the live entertainment community and their respective venues to reach fans on unparalleled platforms.”

Michael Rapino
“As every industry observer knows, too many tickets go unsold and too many fans are frustrated with their ticket-buying experiences. The current inefficiencies in the system result in higher costs and confusion over access to seats. Together, we will work to simplify the ticketing process and ultimately increase attendance at live events. This is also a logical step in the evolution of our business model, creating a more diversified company with a stronger financial profile that will drive improved shareholder value over the long term

“We were a concert promoter that needed to extend and vertically integrate in to what we call the front door: access to the consumer and ticketing. .. As we’ve been talking to Irving it’s been clear that we could accelerate that strategy and join to two complementary businesses and get to the next stage in delivering value. Nothing has changed in our execution. Nothing has changed in our belief that our current ticketing platform is working….we believe combining our forces in today’s economy is a much more efficient use of our resources to increase the pie moving forward.”

A website has been set up for the new company at PremierLiveEntertainment.com. It will house Fact Sheets and Recent News reports. Other key facts about the companies can be found in a list at the bottom of this recent coverage from Metue.

Metue.com

Terms Announced: Live Nation and Ticketmaster Merger

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