CKX leaps on buyout; Dow Jones surges on new talks; proxy fight heats up at Topps, ends at Trico Marine

By Kenneth Lim

Boston, June 1 – CKX Inc. hit a high note on Friday after management offered to take the entertainment company private for $1.33 billion in cash plus a stake in a new company.

Dow Jones & Co. Inc. surged after the company’s controlling Bancroft family agreed to meet Rupert Murdoch, who has offered $17.8 billion to buy the company.

Meanwhile, Topps Co. Inc. rose slightly as the company and a dissident director continued to battle over the company’s possible sale to private equity firms. A proxy battle looms at Topps.

At Trico Marine Services Inc., however, a potential proxy war fizzled out Friday after shareholder Newcastle Partners LP withdrew its proxy solicitation bid for board seats following the company’s adoption of a poison pill plan.

CKX soars on buyout offer

CKX stock rose by more than a third on Friday after the company’s management offered to take the company private in a cash-and-stock deal.

CKX stock (Nasdaq: CKXE) closed at $14.65, up by 37.82% or $4.02.

“CKX was up obviously,” a sellside equity trader said. “Investors seem to like the offer. I think the deal has a good chance of being accepted.”

CKX chief executive Robert Sillerman and American Idol creator Simon Fuller are offering $13.75 per CKX share in their proposal. Each CKX share will also receive one share of FX Luxury Realty LLC, an affiliate that will develop a chain of Elvis Presley-themed casinos and Muhammad Ali-themed hotels. CKX shareholders will control about a quarter of FX Luxury’s stock after a planned listing. New York-based CKX owns the rights to the Elvis Presley and Muhammad Ali names as well as the rights to the American Idol television show.

CKX will seek better offers in the next 45 days, and Sillerman and Fuller have agreed to vote in favor of bids that CKX’s independent directors feel are superior.

“At first glance the premium on the cash portion alone looks really good, but the stock was actually trading near a low before they announced,” the trader said. “The stock was above $15 just a year ago, and it’s traded above $14 many times.”

The trader said investors may still like the offer because of the FX Luxury stock they will receive.

“What you’ll be getting with that new company is a whole bunch of assets and new business that will capitalize on the assets that CKX had and wasn’t doing much with,” the trader said.

“If the new company goes IPO, the value of that stock could be worth even more. The problem is trying to figure out how much that new stock is worth. And the new business will be mostly hospitality and real estate-based, which is quite different from what CKX was doing, so some investors may not find the new stock that appealing because that’s not the kind of business they’re comfortable with in the first place.”

Dow Jones gains on buyout hopes

Dow Jones jumped on Friday after the controlling Bancroft family agreed to meet with bidder Rupert Murdoch, raising hopes that the company could be sold despite the family’s initial reluctance.

Dow Jones stock (NYSE: DJ) rose 14.8% or $7.89 to close at $61.20.

“There’s definitely some sense of exuberance here,” a trader said. “They’re willing to negotiate, and because the offer price was already quite generous people think a deal is quite likely.”

The Bancrofts, who control about 64% of Dow Jones, said late Thursday that they will meet with Murdoch’s News Corp. to discuss the possible sale of the company and determine whether Dow Jones can maintain its “editorial independence, integrity and journalistic freedom.” Dow Jones is a New York-based media company whose products include the Wall Street Journal, Barron’s and Dow Jones Newswires.

News Corp. has already offered $60 per share for Dow Jones, which values the company at about $5 billion. The offer price represented a 67% premium to Dow Jones stock levels before the bid was announced a month ago.

The trader said the stock suggested that investors were confident of a deal, but advised caution.

“Just because they’re willing to go to the table and talk about a deal doesn’t mean a deal is going to get done,” the trader said. “They could be meeting with Rupert Murdoch because there’s a lot of pressure on them to at least consider the offer, but they could come out after the meeting and say, sorry, we still don’t think it’s a good deal. And if that happens the stock is going to crash because all that premium is going to disappear in a flash.”

Topps gains amid proxy fight

Topps improved slightly on Friday as a proxy battle heated up over a possible sale of the company, but the dispute was largely seen as a distraction for now.

Topps stock (Nasdaq: TOPP) closed at $10.29, higher by 0.68% or 7 cents.

“Once in a while you’ll get unhappy shareholders in M&A situations but unless they own a lot of stock or they have a lot of support from other investors it’s not going to make a huge difference,” a buysider said.

Topps late Thursday criticized board member Arnaud Ajdler, who earlier in the day voiced concerns about the company’s takeover agreement with private equity firms Madison Dearborn Partners LLC and Tornante Co.

Ajdler, who opposes the $9.75 per share offer by Madison and Tornante, alleged that Topps’ directors who had agreed to the agreement and were looking into an unsolicited bid by rival Upper Deck Co. had conflicts of interest.

“I have very significant concerns about the process that led to the signing of the merger agreement with entities affiliated with Michael Eisner [who runs Madison Dearborn] and Madison Dearborn Partners LLC.,” Ajdler said in a letter.

Topps replied that Ajdler’s letter was “unproductive…and contrary to maximizing stockholder value. Topps said discussions with Upper Deck, which offered $10.75 per Topps share, are currently focused on whether its bid can “appropriately address the antitrust, financial and other legal impediments to completing a transaction.”

Crescendo Partners, a hedge fund in which Ajdler is a managing director, is also seeking to replace Topps’ entire slate of directors with its own nominees. Crescendo holds a 6.6% stake in Topps.

Topps is a New York-based trading cards and bubble gum maker.

Trico proxy fight ends

Trico Marine also improved on Friday after shareholder Newcastle Partners L.P. withdrew its proxy solicitation to place independent directors on the board and cited a newly adopted “poison pill” rights plan for its decision.

Trico Marine stock (Nasdaq: TRMA) gained 1.59% or 67 cents to close at $42.78.

“I don’t think it’s a big surprise after they adopted the poison pill,” a buysider said. “It didn’t seem like a lot of people were supporting the shareholders in the first place, so maybe that’s why it’s up a bit.”

Newcastle on Friday said it will no longer seek to nominate three independent directors to Trico Marine’s board. The poison pill rights plan prevented Newcastle “from acquiring additional shares and therefore a meaningful enough economic interest to continue with the proxy contest,” Newcastle said in a letter.

Trico Marine adopted the rights plan in April. Proxy advisory firm Glass Lewis had urged Trico Marine shareholders to support the current management, saying the incumbent directors deserve the benefit of the doubt and that Newcastle was seeking board representation disproportionate to its holdings.

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