SFX Gives Sillerman Two Weeks to Secure Financing For Takeover Bid

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Robert F.X. Sillerman rings the NASDAQ closing bell at NASDAQ MarketSite on Oct. 9, 2013 in New York City. 

The proposed bid to take SFX private lacks financing. Other parties are interested only in pieces of the company.

SFX Entertainment has notified chairman and CEO, Robert Sillerman, he has two weeks to provide proof of secured financing for his proposed takeover of the EDM promoter. Sillerman is attempting to take SFX private by acquiring the approximately 62.6 percent of outstanding SFX common stock he does not already own.

An outcome to the proposal is overdue. Sillerman's bid of $5.25 per share in cash, valuing the company at $490 million, was accepted on May 26. The merger agreement called for an SFX special committee to solicit alternate proposals over the proceeding 45-day period. Even though the solicitation period was extended two weeks, SFX announced last week it had received interest in only pieces of the company rather than offers or proposals for the entire company.

Doubts have been mounting that Sillerman would not be able to secure financing. In the last two weeks, SFX shares had slipped 16 percent to $3.10 from $3.70, a signal  investors had little faith they would ultimately receive Sillerman's $5.25 bid. Then last week, Stifel downgraded SFX shares to "hold" from "buy." 

Since its formation in 2012, SFX has rapidly built a portfolio consisting of festivals such as Tomorrowland, TomorrowWorld and Electric Zoo as well as Beatport, a DJ-focused website, download store and streaming service. The company's initial public stock offering in October 2013 raised $260 million