Live Nation Entertainment acquired substantially all of the remaining equity stake in Front Line Management Group, Inc. that it did not previously own for total consideration of $116.2 million in cash and stock, the company announced today. Additionally, Front Line founder and Irving Azoff has been named Chairman of the Board for Live Nation, replacing John Malone, who stepped down from the board. Malone was named interim chairman in October when former chairman Barry Diller stepped down.
On Friday, Live Nation acquired the equity interests in Front Line formerly held by Irving Azoff and Madison Square Garden. The cash portion of the transaction totaled $56.5 million and was funded with cash on hand. The remaining $59.7 million was paid using newly-issued shares of Live Nation common stock.
As a result of the transaction, Live Nation will consolidate the entity for U.S. federal income tax purposes. Of the total shares issued, Azoff received 1.8 million shares of common stock and Madison Square Garden received 3.9 million shares of common stock. MSG Madison Square Garden had acquired a minority equity interest in Front Line Management in June of 2008 (Biz, June 11, 2008).
"Through this transaction we will further simplify and consolidate our operating structure," said Michael Rapino, President and Chief Executive Officer of Live Nation in a statement. "By acquiring full ownership of Front Line, we expect to benefit from substantial savings related to cash taxes, the elimination of the dividend and operating synergies resulting in an increase in our free cash flow in excess of $20 million annually. Front Line is a tremendous asset and a key component of our live entertainment and marketing platform. We look forward to Irving's ongoing contributions as we continue to focus on increasing the growth potential of our combined operations."
Other board changes include Greg Maffei, Chief Executive Officer of Liberty Media Corporation, has joined the Board and has been named Chairman of the company's newly-formed Executive Committee. Separately, the company also announced today that it has entered into an agreement with Liberty, whereby Liberty has acquired 1.8 million shares of Live Nation common stock for $18.8 million in cash. Liberty also agreed to purchase an additional 5.5 million shares of common stock for consideration of $57.7 million in cash, subject to receipt of approval of Live Nation's stockholders, which approval will be sought at the company's 2011 annual meeting of stockholders, and other customary closing conditions.