Anschutz Company cancels AEG sale

May 2013 | FEATURE | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

The Anschutz Company announced in March that it will be retaining its ownership of sports and entertainment giant the Anschutz Entertainment Group Inc. (AEG). The auction of the entertainment unit was terminated after the parent company failed to receive any bids it felt met AEG’s valuation.

AEG, which employs more than 3000 staff in over 45 different operating companies, was put up for sale in September 2012 with Blackstone Advisory Partners charged with managing the sale. Blackstone had hoped to secure $10bn for the unit; AEG’s asking price, however, was believed to have been around $8bn.

A number of groups had expressed an interest in acquiring the company. Potential buyers included Australian shopping centre operators the Westfield Group, private investment firm Colony Capital LLC, Qatari Sports Investment, and investment firm Guggenheim Partners. In March 2012 Guggenheim successfully led a consortium, facilitated by Blackstone, which bought the Los Angeles Dodgers for $2.15bn.

Qatari Sports Investment and Colony Capital made a joint, all cash offer of $7bn for AEG which, ultimately, was unsuccessful. Biotechnology investor and businessman Patrick Soon-Shiong also expressed an interest in acquiring the group. However, none of the interested parties matched AEG’s expectations. “From the very beginning of the sales process, we have made it clear to our employees and partners throughout the world that unless the right buyer came forward with a transaction on acceptable terms we would not sell the company,” said company founder Philip Anschutz. “From the very first days of AEG, my vision has been to tie together world class real estate development structured around entertainment venues with premium sports and live entertainment content. In recent years we have developed related businesses to further promote and enhance the performance of AEG’s facilities for the benefit of our partners, including our sponsors, artists, consumers and the communities in which we operate.”

Mr Anschutz noted that the bids AEG had received during the six month auction had not reflected the “uniqueness” of the company. He added “If, in a sales process I feel I’m not properly compensated for what I think the value is, I’m not going to sell.”

AEG also announced in March that Tim Leiweke, who had served as president and chief executive officer of AEG since 1996, had left the company by mutual consent. Following Mr Leiweke’s departure, Mr Anschutz will be adopting a more hands on role in AEG’s future. “We appreciate the role Tim has played in the development of AEG, and thank him for the many contributions he has made to the company. We wish him well in his new endeavours,” said Mr Anschutz. Ted Fikre, who joined AEG in 1997, was appointed vice chairman of the company, while maintaining his role as AEG’s chief legal and development officer.

Mr Anschutz proposed to sell the company while he was suffering from a debilitating back injury. Following corrective surgery, however, Mr Anschutz now claims to be “reinvigorated” and “re-energised”. Regarding the decision to abandon the auction, Mr Anschutz admitted that he did not like “the noise” surrounding the sale and he was concerned that any successful bid for the company may alter “the power of the model” AEG had built, fearing any new owners may sell off parts of the business. “At its heart it’s a real estate model with some sexy things bolted onto it,” said Mr Anschutz. “I just didn’t want someone changing what we had built.” According to Mr Anschutz, AEG “wasn’t created to be bust up”.

Speaking about Mr Anschutz’s recommitment to AEG, Dan Beckerman, the company’s new chairman and chief executive officer, noted “Phil’s active reengagement in the operations of the company has brought a renewed spirit and passion to the management team’s focus on AEG’s next steps.”

AEG boasts a significant portfolio of both sports franchises and real estate – the company owns the 2012 Stanley Cup champions the Los Angeles Kings, 2012 MLS champions LA Galaxy, as well as a stake in the LA Lakers basketball franchise. The company also owns AEG Live, the world’s second largest touring and concert operator and the 27 acre sports and entertainment complex LA Live. AEG also operates the world’s most popular music arena and entertainment complex by ticket sales, the O2 Arena in London, as well as over 100 other arenas, stadiums and clubs in countries on five continents.

One of the key opportunities that AEG will now focus on will be the $1.8bn football stadium the company hopes to build in downtown Los Angeles. AEG proposes that the stadium, Farmers Field, be built adjacent to the Staples Centre on condition that an NFL franchise is awarded to the city. Mr Anschutz has reiterated that he is willing to finance the construction of the stadium. AEG is also collaborating with MGM to build a new arena in Las Vegas.

Richard Summerfield