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Stereosonic’s $75m Purchase By US EDM Giant Confirmed

Tiesto's crowd at Stereosonic Perth last year
Oct 10th 2013 | 12:28pm | Scott Fitzsimons
American EDM giant SFX Entertainment has outlined its imminent acquisition of Australian company Totem OneLove Group, the promoters of the massive Stereosonic festival, in their initial public offering prospectus overnight.

  • $75 million of SFX's IPO revenue to be used to buy Totem Onelove
  • SFX shares drop 8.5 percent on first day of trading
  • Risks of the EDM festival market raised

Listed on the US stock exchange to raise $US260 million, the company indicated a chunk of those funds will go towards the Totem acquisition, which they have agreed to pay $AU75 million for 100 percent of. The deal is made up of $60 million in cash and $15 million in common stock of SFX. They paid a deposit of $5 million in May.

In 2012 the success of Totem's Stereosonic festival established the company as one of Australia's biggest promoters. With 15 events and five festivals, they had a combined attendance 247,000 punters. This deal also cements their place as a force on the global dance music landscape.

SFX's 65-year-old Chairman and Chief Executive Officer Robert Sillerman – who owns 57 percent of the company – has made concerted efforts to turn SFX into a global EDM (they're calling it electronic music culture, 'EMC')  powerhouse and capitalise on the genre's recent boom in America. Investors did not share his vision overnight however, after the company opened at $13 per share it fell 8.5 percent during trading to close at $11.89. At one stage it was down as much as 17 percent. American financial pundits have placed it amongst the worst-performing IPOs of the year.

In its prospectus SFX outlined a number of risks the company faced, admitting that if the popularity of their festivals, events or online businesses were to falter the business would suffer. They also admit that if the EDM bubble bursts they would struggle.

“Maintaining the strength of our festivals, events and online businesses will be challenging, and our relationship with our fans could be harmed for many reasons,” they wrote, “including the quality of the experience at a particular festival, our competitors developing more popular events or attracting talent from our businesses, adverse occurrences or publicity in connection with an event and changes to public tastes that are beyond our control and difficult to anticipate.”

As well as Totem, SFX also controls – or has deals in place to acquire – website Beatport, North American promoters Disco Donnie Presents, Made Event and EZ Festivals, German promoter i-Motion GmbH Events & Communication, American venue manager MMG Nightlife, branded events promoter Life In Color and international event content providers ID&T Holding. That collection of companies means SFX has interests in Tomorrowland, Sensation, Mysteryland, Q-Dance, Electric Zoo, Nature One, MayDay, Ruhr-in-Love, Life In Color as well as Australia's own Stereosonic.

Infrastructure costs, insurance costs and the possibility of having to cancel events having already paid the up-front costs and potential illicit drug use at their events were also identified as areas that could harm the business.

“Illegal activities or conduct at any of our events or venues may result in negative publicity or litigation,” it reads.

Despite the risks SFX believes “we are the largest producer of live events and entertainment content focused exclusively on the electronic music culture, based on attendance and revenue. We view EMC as a global generational movement driven by a rapidly developing community of avid followers among the millennial generation. Our mission is to enable this movement by providing our fans with the best possible live experiences, music discovery and connectivity with other fans and events.”

Totem's financial details were also revealed in the prospectus, with the company having assets of $6,098,000, $5,072,000 of which is cash. They have $4,257,000 in liabilities, $4,058,000 of which is accounts payable and accrued expenses. SFX estimates the worth of Totem's fan database at $11,442 and their trademarks at $40,065.

As part of Totem's deal they have the option to sell their shares back to SFX at the $13 per share initial public offering price after two years.

Expanding to two days for 2014, this year's Stereosonic festivals will be headlined by David Guetta, Armin van Buuren and Calvin Harris. Totem Onelove Group's Managing Director was ranked at seven in this year's AMID Power 50 of Australia's most powerful music industry identities.

TheMusic.com.au has requested comment from Totem Onelove Group.

 

Comments

Dates

Saturday 29th November

Stereosonic 2014 feat.
Calvin Harris + Tiesto + Diplo + Disclosure (DJ Set) + W&W + DJ Snake + Nervo + Cedric Gervais + Cosmic Gate + Andrew Rayel + Tale of Us + Destructo + Orjan Nilsen + Nina Kraviz + Oliver Heldens + Wilkinson + Scuba + Cash Cash + Kolsch + MaRLo + Mano Le Tough + Shogun + Uberjak'd + Mark Sixma + Nina Las Vegas + Timmy Trumpet + M4Sonic + Generik + LDRU + Yahtzel + Stereosonic

Claremont Showground, Claremont

Saturday 29th November

Stereosonic 2014 feat.
Skrillex + Alesso + Steve Aoki + Showtek + Dash Berlin + Carl Cox + Porter Robinson + Laidback Luke + New World Sound + TJR + Ferry Corsten + Noisia + Deorro + Headhunterz + MK + DVBBS + Booka Shade + Markus Schulz + What So Not + Joel Fletcher + John O'Callaghan + Foreign Beggars + Hot Since 82 + Alison Wonderland + Crookers + Jack Beats + The Aston Shuffle + Route 94 + Simon Patterson + Alex Metric + Deetron + Kaz James + Ilan Bluestone + Nick Thayer + Stereosonic

Sydney Showgrounds, Sydney

Sunday 30th November

Stereosonic 2014 feat.
Skrillex + Alesso + Steve Aoki + Showtek + Dash Berlin + Carl Cox + Porter Robinson + Laidback Luke + New World Punx + TJR + Ferry Corsten + Noisia + Deorro + Headhunterz + MK + DVBBS + Booka Shade + Markus Schulz + What So Not + Joel Fletcher + John O'Callaghan + Foreign Beggars + Hot Since 82 + Alison Wonderland + Crookers + Jack Beats + The Aston Shuffle + Route 94 + Simon Patterson + Alex Metric + Deetron + Ilan Bluestone + Nick Thayer + Slumberjack + Stereosonic

Claremont Showground, Claremont

Sunday 30th November

Stereosonic 2014 feat.
Calvin Harris + Tiesto + Diplo + Disclosure (DJ Set) + W&W + DJ Snake + Duke Dumont + Will Sparks + RL Grime + Peking Duk + Nervo + Cedric Gervais + Cosmic Gate + Andrew Rayel + Tale of Us + Destructo + Orjan Nilsen + Nina Kraviz + Oliver Heldens + Wilkinson + Scuba + Cash Cash + Kolsch + MaRLo + Mano Le Tough + Shogun + Uberjak'd + Mark Sixma + Nina Las Vegas + Timmy Trumpet + M4Sonic + Nicky Night Time + Tigerlily + Generik + LDRU + Yahtzel + Stereosonic

Sydney Showgrounds, Sydney

Friday 5th December

Stereosonic 2014 feat.
Calvin Harris + Tiesto + Diplo + Disclosure (DJ Set) + W&W + DJ Snake + Duke Dumont + Will Sparks + RL Grime + Peking Duk + New World Punx + Nervo + Cedric Gervais + Ferry Corsten + Cosmic Gate + Andrew Rayel + Booka Shade + Oliver Heldens + Wilkinson + MK + Orjan Nilsen + Destructo + Hot Since 82 + MaRLo + Timmy Trumpet + Shogun + Kaz James + DJ Minx + Stereosonic

Adelaide Showground, Wayville

Saturday 6th December

Stereosonic 2014 feat.
Skrillex + Alesso + Steve Aoki + Showtek + Dash Berlin + Porter Robinson + Laidback Luke + TJR + Noisia + Headhunterz + DVBBS + Deorro + Markus Schulz + What So Not + Joel Fletcher + John O'Callaghan + Alison Wonderland + Foreign Beggars + Cash Cash + Crookers + Jack Beats + The Aston Shuffle + Simon Patterson + Alex Metric + Uberjak'd + Ilan Bluestone + M4Sonic + Nick Thayer + Seek n Destroy + Dancespace + Stereosonic

Adelaide Showground, Wayville

Saturday 6th December

Stereosonic 2014 feat.
Skrillex + Alesso + Steve Aoki + Showtek + Dash Berlin + Carl Cox + Porter Robinson + Laidback Luke + New World Punx + TJR + Ferry Corsten + Noisia + Deorro + Headhunterz + MK + DVBBS + Booka Shade + Markus Schulz + What So Not + Joel Fletcher + Cash Cash + John O'Callaghan + Foreign Beggars + Hot Since 82 + Alison Wonderland + Crookers + Jack Beats + The Aston Shuffle + Route 94 + Simon Patterson + Alex Metric + Deetron + Ilan Bluestone + Kaz James + Nicky Night Time + Nick Thayer + Stereosonic

Melbourne Showgrounds, Ascot Vale

Saturday 6th December

Stereosonic 2014 feat.
Calvin Harris + Diplo + Disclosure (DJ Set) + W&W + DJ Snake + Duke Dumont + Will Sparks + RL Grime + Peking Duk + Nervo + Cedric Gervais + Cosmic Gate + Andrew Rayel + Tale of Us + Destructo + Orjan Nilsen + Nina Kraviz + Oliver Heldens + Wilkinson + Scuba + MaRLo + Kolsch + Mano Le Tough + Shogun + Nina Las Vegas + Mark Sixma + Timmy Trumpet + Kaz James + M4Sonic + Tigerlily + LDRU & Yahtzel DJs + Generik + Young Franco + DJ Butcher + Stereosonic

RNA Showgrounds, Bowen Hills

Sunday 7th December

Stereosonic 2014 feat.
Calvin Harris + Tiesto + Diplo + Disclosure (DJ Set) + W&W + DJ Snake + Duke Dumont + Will Sparks + RL Grime + Peking Duk + Nervo + Cedric Gervais + Cosmic Gate + Andrew Rayel + Tale of Us + Destructo + Orjan Nilsen + Nina Kraviz + Oliver Heldens + Wilkinson + Scuba + MaRLo + Kolsch + Mano Le Tough + Shogun + Nina Las Vegas + M4Sonic + Mark Sixma + Timmy Trumpet + Uberjak'd + Generik + Tigerlily + SCNDL + Acid Jacks + LDRU + Yahtzel + Stereosonic

Melbourne Showgrounds, Ascot Vale

Sunday 7th December

Stereosonic 2014 feat.
Skrillex + Alesso + Steve Aoki + Showtek + Dash Berlin + Carl Cox + Porter Robinson + Laidback Luke + New World Punx + TJR + Ferry Corsten + Noisia + Deorro + Headhunterz + MK + DVBBS + Booka Shade + Markus Schulz + What So Not + Joel Fletcher + Cash Cash + John O'Callaghan + Foreign Beggars + Hot Since 82 + Alison Wonderland + Crookers + Jack Beats + The Aston Shuffle + Route 94 + Simon Patterson + Alex Metric + Deetron + Ilan Bluestone + Nick Thayer + Nicky Night Time + Stereosonic

RNA Showgrounds, Bowen Hills

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