WASHINGTON/NEW YORK (Reuters) - Ticketmaster Entertainment TKTM.O and Live Nation (LYV.N) won U.S. antitrust clearance to merge after agreeing to divest certain assets, sending the shares of both companies sharply higher.
The U.S. Justice Department said on Monday it was requiring Ticketmaster to license its primary ticketing software to a competitor, sell off one ticketing unit, and agree to terms that bar it from retaliating against venue owners who decide to use a competing ticket service.
The deal is expected to close in a few days to create a new company called Live Nation Entertainment which would own more than 140 concert venues globally, sell around 140 million tickets a year and promote 22,000 concerts annually.
The combination of ticketing giant Ticketmaster with the world’s largest concert promoter, Live Nation, had attracted criticism from artists, fans and some lawmakers, concerned the new company could dictate terms for major events.
“I was prepared to litigate at any and all points, until a settlement was achieved that efficiently dealt with all our anti-competitive concerns,” Christine Varney, head of the Justice Department’s Antitrust Division, told reporters.
Investors welcomed the decision, sending shares of Live Nation up 14.7 percent to close at $10.51 on the New York Stock Exchange. Ticketmaster shares rose 15.8 percent to finish at 15.40 in regular trading on Nasdaq.
At those prices the all-stock deal would be worth $835 million.
“The conditions seem to be relatively benign,” said Tuna Amobi, equity analyst at Standard & Poor‘s. “There are no major divestitures required. I don’t know that is going to create the kind of even competitive field that was intended.”
Although relatively small combination in U.S. business terms, some had come to view it as a test case for the Obama administration’s pledge to get tough on mergers.
“I will be keeping a very close eye on this settlement as we go forward,” Varney said. “You can probably expect to see three competitors and generally when you see robust competition you see prices coming down.”
Varney said that she expected to see ticket price decline as a result of the settlement. The agreement will last for ten years. Seventeen states joined in the settlement and Canada has a parallel pact imposing similar conditions on the deal.
Ticketmaster will be required to license its primary ticketing software to Anschutz Entertainment Group (AEG), the second-largest concert promoter and operator of major venues. Within five years, AEG can either buy the software, create its own or partner with another competitor.
Additionally, Ticketmaster will also have to sell its Paciolan Inc ticketing unit. It already has a letter of intent from Comcast Corp’s (CMCSA.O) Comcast Spectacor, a sports and entertainment company.
Paciolan could be sold to another buyer the Justice Department finds suitable, the agency said.
Live Nation Chief Executive Michael Rapino said in a statement that the companies are “close to finalizing” the creation of the new company.
Ticketmaster also owns Front Line Management, the leading artist management firm founded by Ticketmaster Chief Executive Officer Irving Azoff. Its roster of 200-plus artists includes The Eagles and Miley Cyrus.
Live Nation owns major venues like the Gibson Amphitheatre in Los Angeles and the House of Blues chain, and has long-term contracts with top artists like Madonna, U2, Jay-Z and Nickelback.
Under the merger terms, Ticketmaster shareholders would receive 1.384 shares of Live Nation common stock for each share of Ticketmaster. Live Nation would own 49.99 percent of the combined company, while Ticketmaster would hold the remaining 50.01 percent.
Additional reporting by Dan Margolies in Washington; Editing by Tim Dobbyn