* Blackstone to contact potential bidders within weeks
* Potential bidders include private equity, strategic buyers
* To boost price, AEG could separate into real estate,
By Nadia Damouni and Ronald Grover
NEW YORK/LOS ANGELES, Sept 19 Billionaire Phil
Anschutz's sports and entertainment business AEG is sparking
interest from a range of media firms and private equity firms,
including Liberty Media Corp, Guggenheim Partners LLC,
Thomas H. Lee Partners LP, Bain Capital LLC and Colony Capital
LLC, in a deal that could fetch more than $6 billion, sources
Anschutz, who is in his mid-70s, launched an auction of
Anschutz Entertainment Group on Tuesday, as he looks for a
partner to take on the company that owns some 100 entertainment
venues globally and sports assets that include the L.A. Galaxy
soccer team, possibly best known for star David Beckham, and a
stake in the L.A. Lakers basketball team.
Sources familiar with AEG's assets said the company could
fetch between $6 billion and $8 billion in a sale. Another
source said AEG has asked for at least $7 billion. AEG President
and CEO Tim Leiweke declined to confirm the price tag but said a
deal would be in the multibillion dollar range.
"The Dodgers were supposedly going to be sold for a billion
dollars," said Leiweke, referring to the $2 billion acquisition
of the L.A. baseball team by a Guggenheim Partners-led group
earlier this year. "We will get a premium because you don't find
those kinds of real estate developments anywhere else. This is
more unique than the Dodgers."
"When we started on this path 15 years ago with Anschutz, he
made it very clear at the time that this is about an equity
play," Leiweke added. "He is not a man that has a huge ego. This
has never been about toys; this has always been about business."
Blackstone Advisory Partners, AEG's investment
banker, intends to begin contacting potential bidders over the
next few weeks. The firm is compiling a list of potential
buyers, which include sovereign funds, private equity, large
pension funds and strategic partners, but some have already said
they would be interested, according to people with knowledge of
Given the size of the business and the diverse portfolio,
sources familiar with potential buyers' thinking said, some
parties could be compelled to break AEG into separate units.
That would result in a holding company for the sports assets
including the Los Angeles Kings hockey team and another holding
real estate that includes its London 02 entertainment district.
Guggenheim, which recently bought Dick Clark Productions in
addition to its Dodgers acquisition, could express interest. So,
too, could Colony Capital, the Los Angeles-based private equity
fund whose assets include the Miramax film studio. A spokeswoman
for Guggenheim declined to comment. A Colony spokeswoman was not
available for comment.
John Malone's Liberty Media is also considered a logical
bidder, although if Liberty participates in the sale, it would
likely be in concert with private equity, said one source
familiar with the situation. Liberty owns a 21 percent stake in
Live Nation Entertainment Inc, a rival concert promoter
to AEG, and would likely need regulatory approval.
A Liberty spokeswoman did not return phone calls.
Thomas H. Lee Partners (THL) and Bain also have preliminary
interest in AEG although the valuation expectation could be hard
for a private equity firm to meet, sources familiar with the
situation said. If they decide to bid, the private equity firms
are likely to seek a partner, they said. Representatives for
Bain and THL declined to comment.
Once the sale of AEG is kicked off, it will be treated as a
classic two-step M&A sale process, where initial indications of
interest will be taken from prospective buyers, leading to more
serious contenders. The company hopes to wrap up a deal by the
first part of next year.
LA WATCHES CLOSELY
The auction is expected to be closely watched by the city of
Los Angeles, where AEG is planning to build a $1.2 billion
football stadium and convention center, called Farmers Field.
AEG won approval from a Los Angeles planning commission for the
stadium on Sept. 13, a key milestone for a project that is
expected to create an estimated 23,000 jobs.
Leiweke said the sale of AEG would not impact the
development and construction of Farmers Field.
Signaling its intention to finish the project would help
allay fears among National Football League teams that might want
to relocate to Los Angeles. The stadium needs a team to be the
anchor tenant to help it service $228.7 million in low-interest
"I have the commitment from them that this won't affect
plans for an NFL team to return to Los Angeles in the near
future," said Mayor Antonio Villaraigosa in a statement.
Councilwoman Jan Perry, whose district would include the new
stadium, said she has been assured that a new owner would honor
commitments AEG has made.
"The stadium will go ahead, with no public money and 23,000
jobs," she said, although she added that she would have to see
whatever agreement AEG signs with the new owners.
"We're taking it day by day," she said.