Live Nation, Ticketmaster merger shows cracks; Chemed shareholder intent on Roto-Rooter split

By Cristal Cody

Tupelo, Miss., March 20 - The market is showing doubts about the combination of Live Nation, Inc. and Ticketmaster Entertainment, Inc., which reported Friday the companies received requests for additional information about the merger from the U.S. Department of Justice.

Also on Friday, MMI Investments, LP's plans to nominate five directors to the board of Chemed Corp. after the company rejected its spinoff proposal for the Roto-Rooter plumbing and Vitas hospice care divisions is purely a strong-arm tactic, a market source said Friday.

Meanwhile, Wall Street's rally stumbled Friday.

The Dow Jones Industrial Average lost 122.42 points, or 1.65%, to close at 7,278.38.

The Standard & Poor's 500 index fell 15.50 points, or 1.98%, to 768.54 and the Nasdaq Composite index closed down 26.21 points, or 1.77%, at 1,457.27.

Doubts circle Live Nation, Ticketmaster

Live Nation and Ticketmaster said the Justice Department request was expected for their application for antitrust clearance.

The merger has been scrutinized by lawmakers and others since the deal was announced Feb. 10 over concerns the combined company would control too much of the live entertainment business.

U.S. Senate and House antitrust subcommittees held hearings in February on the combination.

Los Angles-based Live Nation produces more than 22,000 concerts in 33 countries a year.

West Hollywood, Calif.-based Ticketmaster, which includes a controlling interest in the artist management company Front Line Management Group, sold more than 141 million tickets valued at more than $8.9 billion in 2008.

In the all-stock merger, Ticketmaster shareholders will receive 1.384 shares of Live Nation stock for each share of Ticketmaster.

Regulatory reviews probably will not hold up the deal, though other issues could come to light, David Joyce, an analyst with Miller Tabak & Co., said Friday in an interview.

"I'm still suspect of whether the deal gets done," Joyce said.

The companies expect the deal to close before the end of the year.

Live Nation shares lost 40 cents, or 13.70%, to close at $2.52 on Friday, while Ticketmaster's stock dropped 12 cents, or 2.93%, to $3.97.

MMI roots for Roto-Rooter

MMI Investments, which holds 800,000 shares of Chemed, said it plans to nominate five directors to the board at the company's May 18 annual stockholders meeting.

Cincinnati-based Chemed said in a statement Friday that the board has long considered a split but reiterated its stance against a spinoff of Roto-Rooter and Vitas under the current market conditions.

"Now is not the right time to implement this strategy," the company said.

A market source told Prospect News the timing of MMI Investments' proposal is curious.

"We're not sure why they're so intent on doing it now. It's certainly not good timing in the market as management pointed out," the source said Friday. "But they're definitely interested in trying to get some of their guys on the board and strong-arm the board into doing a spinoff."

Chemed shares rose 72 cents, or 1.99%, to $36.96 in trading Friday. The stock has traded from $29.00 to $50.79 over the past year.

Mentioned in this article:

Chemed Corp. NYSE: CHE

Live Nation, Inc. NYSE: LYV

Ticketmaster Entertainment, Inc. Nasdaq: TKTM

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