* High single, low-double digit billion dollar price seen
* Initial information sent to potential buyers on Monday
* Pitch books with finances expected out by month-end
* Blackstone seeks to control how bidders team up
By Nadia Damouni and Paritosh Bansal
NEW YORK, Oct 9 (Reuters) – Billionaire Phil Anschutz has
kicked off the auction of his Anschutz Entertainment Group, with
an expectation that the sports and entertainment giant should
draw bids in the $10 billion range, higher than previously
believed, according to sources familiar with the situation.
The initial, 25-page AEG information memorandum that
describes the business but has no financial information was
expected to go to “dozens” of potential buyers on Monday, the
sources said. The initial group of recipients is expected to
include rich individuals, rivals, sovereign wealth funds, real
estate firms, and private equity firms, they said.
Anschutz is likely to start signing non-disclosure
agreements and send out the books with financial details by the
end of the month, the sources said.
The list of potential bidders includes trade buyers such as
Liberty Media Corp ; investment companies such as
Guggenheim Partners LLC; private equity firms such as Thomas H.
Lee Partners LP, Bain Capital LLC and Colony Capital LLC; and
rich individuals such as Los Angeles biotech billionaire Patrick
Soon-Shiong, sources have previously said.
Bidders are likely to need to come up with bids in the “high
single digit, low double digit” billion dollars to proceed to
the next round, the sources said, signaling that Anschutz has a
higher price expectation than previously believed.
Sources close to potential buyers had said last month that
the company could fetch between $6 billion and $8 billion in a
sale.
“The Anschutz Co has no comment on the sales process beyond
its press release announcing the sales process,” it said in a
statement on Monday. As a private owner, the Denver-based
billionaire has the final say in any deal.
Anschutz said last month that it was exploring a sale of AEG
and had hired Blackstone Advisory Partners to advise it on the
process.
AEG, which has around 25,000 employees, has developed more
than 100 entertainment venues globally, in some of the world’s
largest cities such as Los Angeles, London, Berlin and Shanghai.
These include the Staples Center in Los Angeles, The O2 Arena in
London and the Mercedes-Benz Arena in Shanghai.
The company also owns sports assets that include the Los
Angeles Galaxy Major League Soccer team, possibly best-known for
its star David Beckham, and a stake in the National Basketball
Association’s Los Angeles Lakers..
The idea behind AEG broadly is to own the real estate and
draw people to the venues through sporting events and live
entertainment. Anschutz wants to keep the AEG platform in one
piece because he believes the company’s holdings are more
valuable as a group than in individual pieces, the sources said.
The price expectations and Anschutz’s insistence on keeping
the platform and the management team in place, however, adds
complexity to an eventual sale.
A buyer would need to write a large check for the company,
including their own cash and bank financing, which could make it
necessary for bidders to form consortiums.
There are no easy comparisons for potential buyers to draw
on in valuing the company. What’s more, Anschutz will need to
get approvals from sports organizations such as the National
Hockey League and the National Basketball Association to be able
to transfer ownership of sports teams.
A valuation analysis could eventually include a sum of the
parts determination, the sources said. For example, one of the
sources said, the Staples Center in Los Angeles alone could be
worth around $1 billion.
Blackstone bankers are also planning to keep control of how
bidding groups are formed, the sources said. The confidentiality
agreement with potential buyers is expected to have a provision
that will prevent parties from discussing joint bids.
The requirement is sometimes imposed by sellers in auctions
to prevent bidders from forming groups as a way to undercut on
price and possibly to help broker deals between bidders when the
size of the asset is large.
Later on in the auction, possibly around the second round,
the advisers also plan to launch a parallel process to seek
approvals from the various sports leagues for the bidders, the
sources said.
Blackstone bankers used a similar approach when they advised
on the sale of the Los Angeles Dodgers baseball team earlier
this year, which eventually sold for $2 billion to Guggenheim
Baseball Management, a group that includes Los Angeles Lakers
star Magic Johnson and one-time Hollywood studio executive Peter
Guber.
In the Dodgers deal Johnson was the “face” of the
consortium, a preference among sports leagues that usually
insist on an individual rather than an institution buying the
franchises.
Anschutz is likely to look to pair up the bidders in a
similar manner as well, the sources said.
Blackstone declined to comment.
(Reporting By Nadia Damouni and Paritosh Bansal; Editing by
Martin Howell and Jim Marshall)
