Conditions likely for Ticketmaster merger; First American takes steps to buy First Advantage

By Cristal Cody

Tupelo, Miss., Oct. 8 - The Competition Commission in London on Thursday provisionally ruled against the merger of Ticketmaster Entertainment, Inc. and Live Nation, Inc. on antitrust concerns but offered some potential remedies.

The companies likely are prepared to agree to conditions in order to get the deal completed, an analyst told Prospect News.

Also on Thursday, business information services provider First American Corp. said it will buy the remaining 20% of outstanding shares that it does not already own of its subsidiary, First Advantage Corp.

Although First Advantage shares traded below the offer's terms on Thursday, the deal looks like a good move for the company, an analyst said in an interview.

Meanwhile, stocks improved slightly on Thursday.

"Equity markets weakened from midday with the major indices closing up 0.8%," a market source said Thursday. "The primary reason for the weaker close was the rise in Treasury rates."

The Dow Jones Industrial Average closed up 61.29 points, or 0.63%, at 9,786.87.

The Standard & Poor's 500 index rose 7.90 points, or 0.75%, to 1,065.48, and the Nasdaq Composite index gained 13.60 points, or 0.64%, to close at 2,123.93.

Music deal sparks U.K. concerns

The Competition Commission said Thursday in a statement that Live Nation's $400 million stock acquisition of Ticketmaster would hinder a German competitor, CTS Eventim AG, in the U.K. market.

Before the merger was announced, Live Nation had agreed to provide CTS with ticketing services to live music events, the commission said.

The commission said several remedies include the prohibition of the merger, the divestment of all or part of the U.K. business operations of Ticketmaster or Live Nation or a requirement that Live Nation use CTS or another third-party ticket agent to act as the retailer for Live Nation's U.K. events.

The commission's final report on the merger is due by Nov. 24.

David Joyce, an analyst with Miller Tabak & Co., told Prospect News on Thursday that the decision should not be "totally unexpected" since the commission is focused on preserving competition.

"These are two of the largest providers in the live music space, and management knew that going in," he said. "There could be conditions they would agree to so they can get this done."

Beverly Hills, Calif.-based concert promoter Live Nation and West Hollywood, Calif.-based Ticketmaster said Thursday in a joint release that the companies are committed to the deal and will cooperate with the commission.

"We firmly believe that our merger achieves an important and much needed public interest, and remain optimistic that it will ultimately be approved," the companies said.

The deal also is under scrutiny by U.S. antitrust regulators.

Live Nation shares dropped 48 cents, or 5.57%, to $8.14, while Ticketmaster shares lost 56 cents, or 4.49%, to close Thursday at $11.90.

First Advantage moves toward buyout

First American currently controls about 80% of the outstanding shares of risk mitigation and business solution firm First Advantage.

Under the tender exchange offer, First Advantage's shareholders would receive 0.58 of a First American share for each share of First Advantage. Based on First American's closing stock price Wednesday, the exchange ratio represents an offer price of $18.86 per share.

Poway, Calif.-based First Advantage said in a statement that a special committee of independent directors will recommend that its shareholders tender their shares.

An analyst told Prospect News that First Advantage shares traded below the offer terms Thursday on industry-wide concerns.

The merger is "a good deal," the analyst said. "It will be better for the company to be back at First American and better for First American not to have FADV be publicly traded."

First Advantage shares closed down 43 cents, or 2.30%, at $18.23 on Thursday. The stock has traded from $6.99 to $19.44 over the past year.

Shares of Santa Ana, Calif.-based First American shares lost 84 cents, or 2.58%, to close at $31.67.

Mentioned in this article:

First Advantage Corp. Nasdaq: FADV

First American Corp. NYSE: FAF

Live Nation, Inc. NYSE: LYV

Ticketmaster Entertainment, Inc. Nasdaq: TKTM

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