Selling American Idol and Elvis (CKXE)

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CKX, Inc. (NASDAQ: CKXE) is for sale.  This morning the company confirmed that it was in discussions about a possible transaction.  This is not your typical merger, not at all.  CKX owns the rights to the IDOLS, which of course is the American Idol series and local Idols series which have aired in more than 100 countries.  It also owns the name, images and likeness of Elvis Presley and the operations of Graceland along with the rights to the name, image and likeness of Muhammad Ali.

Based upon a $5.96 price on Friday, the company’s market cap is more than over $550 million.  The WSJ has reported late on Friday that its CEO and One Equity Partners are close to a deal.  Bloomberg reported that JPMorgan Chase & Co. private-equity arm, One Equity Partners, is close to a deal for about $6.00 per share, according to “sources.”  The problem is that $6.00 is hardly a premium and the 52-week range is $3.87 to $8.24.

According to our most recent SEC data, CEO Robert Sillerman owns more than 19 million shares of common stock, about a 20% stake.  After that, W.R. Huff Asset Management holds almost 15% and then BlackRock and Capital Research each hold over 8% stakes.

CKX did caution that there are no assurances that it will enter a formal merger, nor would it discuss the timing, price or terms which have been speculated.  The company will also not comment or make additional statements on the topic “unless a definitive agreement is entered into or adopted.”

American Idol as a brand is worth more or less through time, depending upon each season’s popularity.  As far as if shareholders today believe that Elvis and Idol combined are worth more than $550 million combined, the stock is trading up over 3% at $6.15 on active volume for this stock right after the open.

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