SFX Entertainment is slowly taking over major electronic music companies around the world. According to their securities filing with the SEC, SFX Entertainment believe that they are “the largest producer of live events and entertainment content focused exclusively on the electronic music culture (“EMC”), based on attendance and revenue.” This should come as no surprise as these are their reported completed and planned acquisitions including how much of each company they have or will acquire (copied directly from SEC filing):
|BEATPORT, LLC “Beatport”Completed||100||%||NA||NA||Principal online resource and destination for EMC DJs and enthusiasts, offering music for purchase in multiple downloadable formats (including uncompressed, high quality audio files) and providing unique music discovery tools for DJs and fans.|
|Disco Donnie Presents “DDP”Completed||100||%||600 / 8||867||Promoter of EMC events in North America since 2000, including ownership interests in large EMC festivals.|
|ID&T Holding B.V. “ID&T”Planned||75||%||35 / 29||964||One of the largest content providers and producers of international EMC live events across 19 countries and four continents. ID&T branded festivals include Tomorrowland, Mysteryland, Sensation, Q-Dance, B2S, Decibel and Defqon.1. At the same time as this acquisition, we will increase our interest in the ID&T JV from 51% to 75%.|
|i-Motion GmbH Events & Communication “i-Motion”Planned||60||%||7 / 5||208||Leading promoter and producer of EMC festivals and events in Germany, with key brands including Nature One, Germany’s largest open-air EMC festival.|
|Life in Color
|100||%||138 / 4||424||Promoter and organizer of branded events that feature live music by DJs, acrobatic acts and “paint blasts.”|
|Made Event, LLC and
EZ Festivals LLC collectively, “Made”Planned
|70||%||14 / 1||130||Promoter and producer of EMC festivals and events in the United States, including Electric Zoo, held annually in New York City.|
|MMG Nightlife LLC “MMG”Completed||80||%||NA||NA||Management company that manages some of the most popular EMC venues in South Beach, Florida.|
|Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd collectively, “Totem”Planned||100||%||15 / 5||247||Promoter and producer of leading Australian EMC festival, Stereosonic, a five city touring outdoor festival held annually in summer (November/December) in conjunction with a touring and promotion business.|
Here are the descriptions of the planned acquisitions copied from the SEC filing:
•Under our option (the “ID&T Option”) to purchase a 75% ownership interest of the worldwide business of ID&T (the “ID&T Business”), our acquisition of the ID&T Business will cost $50.0 million in cash (including a subsequent $10.0 million payment) plus the cancellation of a $7.5 million debt owed to us by ID&T. These are in addition to the $2.5 million in cash and 2,000,000 shares of common stock we paid to acquire the ID&T Option.
•Under a term sheet with i-Motion, our initial acquisition of a 60% ownership interest in i-Motion will cost $12.0 million, consisting of $8.0 million in cash and $4.0 million in shares of our common stock at the price to the public in this offering.
•We have entered into an asset contribution agreement with Totem, under which we have agreed to pay AUD$75.0 million, consisting of AUD$60.0 million (or $55.3 million) in cash and AUD$15.0 million (or $13.8 million) in shares of our common stock at the price to the public in this offering, to acquire 100% of Totem. Under the terms of the agreement, we were obligated to pay an AUD$5.0 million (or $4.8 million as of May 22, 2013) deposit, which we funded on May 22, 2013.
•Under our term sheet with Made, our acquisition of a 70% ownership interest in Made will cost $35.0 million, consisting of $20.0 million in cash, $5.0 million in our common stock at the lower of $12.75 per share or the price to the public in this offering, and $10.0 million in promissory notes. On June 24, 2013, we advanced $2.5 million towards the purchase price for this transaction. We will be required to purchase the remaining 30% that is not being sold in 2018.
It should also be noted that SFX will buy the remaining 30% of Made Event in 2018 when it becomes available. This is likely because the owners of that 30% believe their equity will be worth more 5 years down the road.
Also SFX will begin offering free events according to the filing saying: “We believe the value of the experiences we offer is compelling enough to attract one or more partners willing to support multiple free events and other fan-friendly initiatives. We are in advanced discussions with several such partners to support these initiatives and enhance the access and experience of our fans.”
I believe it is important as a community that dance music fans are aware of and understand this material. You can view the entire SEC filing HERE. If you have any questions or comments about the article or filing feel free to email me at [email protected] or tweet at me at @Jacob_YourEDM.