CKX, Owner of `American Idol,' Sued Over Creator Simon Fuller's Buyout Bid
CKX Inc., the owner of TV’s “American Idol,” was sued by a shareholder demanding its directors seek competing bids after a group led by the show’s creator, Simon Fuller, made a $600 million takeover offer.
The bid, for about $6.45 per share, undervalues the New York-based company in light of its prospects, investor Richard Nierenberg said in a complaint filed today in Delaware Chancery Court in Wilmington. He asked the court to order the board to generate an auction for the company and to entertain all reasonable bids.
“Delaware law requires directors to take all steps reasonably required to maximize the value stockholders will receive,” and “the $600 million offering price provides inadequate consideration,” Nierenberg contends.
CKX confirmed May 28 it had received the offer and said it was considering potential alternatives. Fuller and former CKX Chief Executive Officer Robert F.X. Sillerman tried to take the company private in 2007 and dropped their $12-a-share bid in 2008.
The company has a market capitalization of about $466 million, according to Bloomberg data.
Ed Tagliaferri, a spokesman for CKX, said in an e-mailed message that the company had no comment.
Last month, the company said it had hired Wachtell, Lipton, Rosen & Katz as legal adviser and Gleacher & Company as financial adviser, and that “there can be no assurance that it will enter into any agreement.”
The company says it develops entertainment content, and among its properties are rights to the images of Elvis Presley and Muhammad Ali. It also owns Idol adaptations shown in more than 100 countries, according to the CKX website.
CKX rose 9 cents to $5.01 at 4:30 p.m. New York time in Nasdaq Stock Market trading. The shares have fallen 5 percent this year.
The case is Nierenberg v. CKX Inc., CA5545, Delaware Chancery Court (Wilmington).