LOS ANGELES (CelebrityAccess) — On Tuesday, Live Nation Entertainment announced it has terminated a deal to purchase Latin American concert giant OCESA after failing to reach a modified agreement with CIE, one of the two parent companies of OCESA.
Live Nation says it was in talks with CIE and Grupo Televisa over potential modifications to the timing and terms of the deal, but was unable to reach an agreement on modified terms.
As a consequence, Live Nation notified CIE on May 25th that it was terminating the purchase agreement, citing CIE’s failure to comply with its contractual obligation to continue operating OCESA in the “ordinary course of business” as well as the “occurrence of a material adverse affect” which is presumably COVID-19.
Live Nation had previously indicted it wanted to slow the deal down amid the COVID-19 outbreak, with Live Nation CEO Michael Rapino telling investors during the company’s second quarter conference call that the company was not looking to absorb losses from Mexico during the COVID-19 recovery.
“We want to delay the cash payment of the deal until we both know how and when we’re on the other side of this crisis. So that’s the intent,” Rapino told investors during the call.
Live Nation’s bid to terminate the deal follows the expiration of a stand-still agreement signed on May 5th that put the deal on hold while the parties negotiated their differences.
However, CIE, which owns an 11% stake in OCESA, says Live Nation can’t unilaterally end the purchase, and said it will continue to “analyze its alternatives and reserves all of its rights under the agreements executed in connection with such transaction and the applicable laws.”
Grupo Televisa concurred with CIE’s position on the deal, stating that it reserves its rights in the transaction and will evaluate “all remedies and actions” moving forward.
According to Live Nation, they have commenced binding arbitration proceedings to seek a declaratory judgement that it properly terminated its purchase agreement with CIE.
Despite Live Nation’s bid for resolution through binding arbitration, it seems likely that the failed deal will lead to litigation as well.
The deal, first announced in July 2019, would have seen Live Nation acquire a controlling interest in the largest concert promoter in Latin America for a reported $480 million.