Ticketmaster deal faces overseas review; Validus pushes for IPC buy; Gilat investor an 'ally'

By Cristal Cody

Tupelo, Miss., June 10 - The combination of Ticketmaster Entertainment, Inc. and Live Nation, Inc. met another regulatory wall after the deal was referred to London's Competition Commission, but the companies and at least one market observer told Prospect News on Wednesday that the deal should ultimately clear.

Also on Wednesday, Validus Holdings, Ltd., IPC Holdings, Ltd. and Max Capital Group Ltd. continued to plead their cases for Friday's shareholder meetings on IPC's amalgamation with Max Capital.

In other situations, a Gilat Satellite Networks Ltd. spokesman told Prospect News on Wednesday that the firm that plans a tender offer to buy 5.00% of shares and pool the stock to control a 25.30% stake is a longtime ally of the company.

Meanwhile on Wednesday, investors sent the Dow Jones Industrial Average down 24.04 points, or 0.27%, to close at 8,739.02.

The Standard & Poor's 500 index also lost 3.28 points, or 0.35%, to close at 939.15, and the Nasdaq Composite index dropped by 7.05 points, or 0.38%, to 1,853.08.

Ticketmaster review

The Office of Fair Trading in London said Wednesday it will refer Live Nation's $400 million stock acquisition of Ticketmaster to Britain's antitrust regulator to examine whether competition will be restricted for ticketing services and event promotion.

In a statement on Wednesday, the Competition Commission said its report is due by Nov. 24, but the report may be extended by another eight weeks.

Beverly Hills, Calif.-based Live Nation is the world's largest concert promoter, and West Hollywood, Calif.-based Ticketmaster controls the majority of ticketing services for events.

Ticketmaster said in a statement released Wednesday to Prospect News that the referral is standard under a full regulatory review.

"Live Nation and Ticketmaster will cooperate fully with the Competition Commission as it reviews the merits of our proposed merger," Ticketmaster said. "We are confident that after the commission completes its work, they will conclude that it meets the criteria for final clearance."

The merger has been scrutinized by U.S. lawmakers and regulators since the deal was announced Feb. 10 over concerns of the influence the combined company would have on the live entertainment business.

The U.S. Department of Justice currently is reviewing the deal after lawmakers held hearings on the merger in February.

According to Ticketmaster's latest quarterly filing, the merger also is subject to antitrust review in Canada, Norway and Turkey.

The deal includes a $15 million breakup fee and a merger termination date of Feb. 10, 2010, with a three-month extension.

The companies expect the deal to close in the third or fourth quarter.

David Joyce, an analyst with Miller Tabak & Co., said in an interview Wednesday that the deal's closing could be delayed into 2010 because of regulatory reviews.

"They could try to speed things up or put together their assets in markets other than the U.K. as a partial interim solution. It's still up in the air," he said.

Joyce, who had his doubts about the deal in the beginning, said now he is "moving more positively toward them getting it done."

That's because Ticketmaster and Live Nation "potentially have some smaller assets they can sell if they need to for conditional requirements," he said. "They also have been trying to patch up relations with regulators to ensure them the mishaps on the web sites earlier this year were not malicious but software problems."

Some government scrutiny over the deal was prompted after Ticketmaster's online ticketing site had redirected customers for Bruce Springsteen concert tickets earlier this year to another site with more expensive tickets.

Ticketmaster's stock fell 7 cents, or 0.92%, to $7.50 on Wednesday, while Live Nation shares lost 4 cents, or 0.73%, to close at $5.46.

Countdown to Friday

Validus said in a statement Wednesday that IPC overestimates the time it would take to close a deal with Validus.

If IPC shareholders vote down the proposed Max amalgamation at Friday's annual meeting, Validus said it has three alternatives - including an exchange offer that can close soon after the June 26 expiration date "with or without the cooperation of IPC's board."

Validus also could pursue an amalgamation agreement or a scheme of arrangement with permission from the Supreme Court of Bermuda.

IPC has said that even if it proceeded with Validus on a friendly basis, a combination of the two companies could not be completed until mid-August.

Meanwhile, IPC said Wednesday that RiskMetrics Group Inc.'s report that recommends against the transaction with Max Capital is flawed and, if corrected, would show "that the Max deal is superior to the Validus offer."

RiskMetrics declined to comment publicly Wednesday on IPC's statement but reiterated its recommendation against the amalgamation with Max Capital in a revised report released to Prospect News.

RiskMetrics ISS Governance Services said the implied premium in Validus' offer and its calculations "suggest that at least in the short-run, IPC shareholders are likely to benefit more from a combined IPC/Validus transaction."

On Tuesday, IPC rejected Validus' increased bid of $3.75 a share in cash and 1.1234 Validus shares for each IPC share.

Under IPC's $912 million stock amalgamation with Max Capital, Max shareholders will receive 0.6429 of an IPC share for each Max share, and IPC shareholders will receive a $2.50-a-share cash dividend after the merger closes.

Proxy firm Glass, Lewis & Co. has recommended in favor of the Max amalgamation.

"The offers are within 5.00% of each other," an analyst told Prospect News. "I think the salient point remains that Validus' offer's never been through due diligence."

IPC shares rose 23 cents, or 0.85%, to close Wednesday at $27.21, and Max Capital's stock added 2 cents, or 0.12%, to $16.62.

Shares of Validus gained 56 cents, or 2.36%, to $24.25.

Gilat stock buying spree

KCPS Satellite Communications, LP offered to buy 2,026,000, or 5.00%, of outstanding shares of Gilat Satellite for $3.65 a share in cash on Monday.

The offer from KCPS, a Tel Aviv, Israel-based firm formed to buy Gilat shares, expires on July 9.

Tom Watts, a spokesman for Petah Tikva, Israel-based Gilat, told Prospect News on Wednesday that KCPS has "long been an ally of Gilat's."

KCPS said in a regulatory filing that it does not currently own any Gilat shares but that it jointly holds 20.20% of the company's stock through a voting agreement with JGD Management Corp./York Capital Management. York Capital beneficially owns more than 8.12 million shares of Gilat.

"They have a board member, and they've bought Gilat shares opportunistically in the past," Watts said. "I think this is a sign they're continuing to support the company and believe in its future and believe its shares are undervalued."

Gilat shares closed up 11% on Tuesday but fell 10 cents, or 2.56%, on Wednesday to $3.80. Shares have traded from $2.17 to $11.20 over the past year.

Mentioned in this article:

Gilat Satellite Networks Ltd. Nasdaq: GILT

IPC Holdings, Ltd. Nasdaq: IPCR

Live Nation, Inc. NYSE: LYV

Max Capital Group Ltd. Nasdaq: MXGL

Ticketmaster Entertainment, Inc. Nasdaq: TKTM

Validus Holdings, Ltd. NYSE: VR

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