SBD/March 1, 2013/Finance

Sources: Colony Capital Takes Lead On AEG Bid After Guggenheim Withdrawal

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Colony Capital Founder, Chair & CEO Tom Barrack has “taken the lead in the auction” for AEG after Guggenheim Partners “dropped out of the bidding,” according to sources cited by Saitto & Fixmer of BLOOMBERG NEWS. A source said that Lakers investor Patrick Soon-Shiong, who “remains in the auction, is unlikely to make an offer near" the $8B asking price for AEG. The source added that Guggenheim “may also reconsider if the price drops.” Sources said that Colony and its partner, Qatar’s sovereign-wealth fund, also are “bidding below the asking price," leaving “open the possibility of another offer topping theirs.” The sources added that AEG Chair Phil Anschutz also “may not sell.” Sources said that the negotiations to sell AEG “are on hold" as Anschutz recovers from back surgery (BLOOMBERG NEWS, 3/1). The WALL STREET JOURNAL’s Futterman & Karmin write any buyer who steps up for AEG is seeking "likely won't be doing it for the current earnings.” Sources said that AEG’s earnings before interest, taxes, depreciation and amortization for the most recent year “stand at about" $350M. In comparable transactions, earnings in that range “would suggest a value" of under $5B. But sources said that Blackstone Group, which is handling the sale, "set a goal of selling AEG" for $7-11B. The sources added that while Blackstone “remains optimistic that it will eventually get the value it seeks, some potential buyers continue to value AEG" at $4-5B. A source said that Blackstone is “following the same strategy it used when it handled the sale" of the Dodgers to Guggenheim last year. Blackstone at the time declined to “estimate the price the Dodgers opportunity could fetch on the open market, leaving it to the bidders to set their own values.” Sources said that nonbinding offers for AEG “are in as part of a second round of bidding” (WALL STREET JOURNAL, 3/1).
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