By Cristal Cody
Tupelo, Miss., Feb. 10 - Shares of Live Nation, Inc. and Ticketmaster Entertainment Inc. fell as investors gave a thumbs down to the deal that had been widely speculated on for a week until the formal announcement on Tuesday.
Moving to other deals, the market expects Roche Holding AG to sweeten its $86.50-a-share bid for Genentech Inc., but the Swiss company probably won't reach Genentech's expectations of $112.00 a share, an analyst told Prospect News on Tuesday.
In other action, the $136 million all-stock buyout from CSR plc is probably a wish come true for shareholders of SiRF Technology Holdings, Inc., considering the company's future, an analyst said in an interview.
On Wall Street Tuesday, the blue chips and broader indexes fell more than 4% on concerns with the Treasury Department's latest bailout plan to restore credit markets.
The Dow Jones Industrial Average shed 381.99 points, or 4.62%, to close at 7,888.88.
The S&P 500 index dropped 42.73 points, or 4.91%, to 827.16, while the Nasdaq Composite index lost 66.83 points, or 4.20%, to finish at 1,524.73.
Live Nation, Ticketmaster shares fall
Shares of Live Nation lost 47 cents, or 8.88%, to close at $4.82 after Tuesday's announcement, while Ticketmaster's stock dropped 42 cents, or 6.39%, to $6.15.
Analysts expect the deal to face significant regulatory scrutiny, and Democratic leaders and artists such as Bruce Springsteen have spoken out against the deal because of the concentration of music industry power.
Beverly Hills, Calif.-based Live Nation is the largest producer of live concerts in the world, managing concerts for more than 1,500 artists such as Madonna, U2 and Jay-Z.
West Hollywood, Calif.-based Ticketmaster is the leading entertainment ticketing and marketing company.
Under the $2.5 billion deal, Ticketmaster shareholders will receive 1.384 shares of Live Nation common stock for each share of Ticketmaster they own.
Michael Rapino, Live Nation's chief executive officer, said on a conference call Tuesday that the deal will need antitrust clearance from the Department of Justice.
"We'll close this deal in a timely fashion," he said.
The merger is expected to close by the second half of 2009.
An analyst who follows the company said Tuesday the deal could be held up by the Justice Department.
"In the last administration, they would have figured out how to get it done, but this is the first test of the Obama Justice Department," he said. "It's going to be a tough review."
The deal also hangs on approval by shareholders of both companies and consent of Ticketmaster's bank lenders.
John Hopmans, executive vice president of mergers and acquisitions and strategic finance at Live Nation, said the companies have not talked with lenders yet.
"We've been working with our investment bankers and we have a sense with the current market conditions of what to expect, but no definitive agreement has been started today," he said on the call.
The combined company will be called Live Nation Entertainment, and the board will have 14 directors made up evenly of representatives from each company.
Investors dream of sweeter Genentech bid
Analysts expect Roche to sweeten its $86.50-a-share bid for Genentech, especially in April after data for a cancer drug is released.
"We don't expect any bid to be above $100.00, but we think Roche could probably get it done in the mid-$90.00s," said Christopher James, an analyst with Rodman & Renshaw LLC. "A couple of key events are going to happen soon. We'll see the data for the trial. That will be the key driver as far as whether Genentech is able to get the bid up any higher."
Genentech is expected to release study data on its drug Avastin as treatment for adjuvant colon cancer.
According to Roche's tender offer filed late Monday with the Securities and Exchange Commission, Roche was told in December that Genentech's special committee would be willing to accept $112.00 a share.
Genentech's board urged shareholders to take no action on Roche's offer, which expires March 12. The company said in a statement that its special committee will take a formal position on the offer within the next 10 business days.
In the short term, some investors are expected to tender shares, James said.
"A lot of hedge funds are going out of business and may need to liquidate. [Roche's] 55% stake could go up to 65%," he said. "It appears that the market still thinks there's an amount of risk to this getting done at a price significantly above $89.00"
Genentech shares slipped a penny, or 0.01%, to close at $82.69.
SiRF gets relief
Cambridge, England-based CSR said Tuesday it will acquire San Jose, Calif.-based SiRF in a deal that gives shareholders 0.741 of a CSR share for each share of SiRF, a 91% premium to the stock's closing price on Monday.
Shares of SiRF jumped 60 cents, or 55.56%, to close at $1.68 on Tuesday.
CSR's stock rose 11.50p, or 6.17%, to 198p in trading Tuesday.
"There could be some shareholders who look at it as not much of a premium, but given the set of facts, shareholders should be happy to receive anything," said Adam Benjamin, managing director of Jefferies & Co.
On Tuesday, SiRF reported that fourth-quarter revenue fell 53% to $47.3 million from the same period a year ago.
"This is a company that's losing money, is struggling and losing market share and has been ruled against it over infringing on patents by one of their competitors," said Benjamin, who does not expect any bidding wars to erupt over SiRF.
The buyout is expected to close in the second quarter of 2009.
Mentioned in this article:
CSR plc London: CSR
Genentech Inc. NYSE: DNA
Live Nation, Inc. NYSE: LYV
| Roche Holding AG: | Swiss: RO
|
| SiRF Technology Holdings, Inc. | Nasdaq: SIRF
|
| Ticketmaster Entertainment Inc. | Nasdaq: TKTM
|
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