Live Nation to buy majority stake in Latin America’s biggest concert promoter for $450m

Credit: Live Nation/press

Live events giant Live Nation Entertainment has struck a deal to buy a majority (51%) stake in Mexico-based concert promoter OCESA Entretenimiento for nearly $450 million.

The deal, first reported by the Wall Street Journal, is expected to close by the end of this year, or the start of 2022 and is priced at 8.84 billion Mexican pesos (approx $444 million).

Live Nation originally entered into an agreement to buy 51% of OCESA, Latin America’s largest concert promoter, for over $400m in summer 2019, but pulled out of the deal in May last year during the slump in the global concert business due to the COVID crisis.

The US company walked away from the acquisition just a month after Mexican competition regulators approved the deal.

In spite of the scrapped deal, Live Nation boss Michael Rapino suggested at the time that his company was still interested in striking an agreement with OCESA in future, stating on May 7, 2020 that, “we are, long term, still bullish on [OCESA’s] business and ours”. He added: “We want to be in business with OCESA and get the deal done.”

He noted however that: “I’m not looking to take on any losses from Mexico while they’re going through their six or eight months of business downturn [due to COVID]… Ideally, we want to get the deal done. 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.”

The joint sellers of the stake are the Inter-American Entertainment Corporation (Corporación Interamericana de Entretenimiento, or CIE) and Grupo Televisa, a media giant in the Spanish-speaking world.

Live Nation is reportedly buying a 40% stake in OCESA from Grupo Televisa, and 11% of the concert promoter from CIE.

CIE will hold on to the remaining 49% minority stake in OCESA, according to the WSJ.

The WSJ also reports that Live Nation ‘is expected to hold back 7% of the closing price to cover any potential operating losses for several quarters’.

As noted by the WSJ, the deal indicates that both companies, Live Nation and OCESA, are bullish about the live industry bouncing back from its downturn during the pandemic.

Speaking to the WSJ, Live Nation Chief Financial Officer Joe Berchtold said: “We’re confident.”

“They’re the mini Live Nation of Mexico and the beachhead to Latin America.”

Joe Berchtold, Live Nation

He added: “The timing wasn’t right when Covid hit to close it. They’re the mini Live Nation of Mexico and the beachhead to Latin America.”

Berchtold is also cited by the WSJ as stating that Latin America is Live Nation’s largest ‘untapped market.’

UPDATE: This news was confirmed in an official press release issued by Live Nation today (September 13), in which the company revealed further that as part of the transaction, it has also acquired an interest in OcesaSeitrack, OCESA’s booking and artist management joint venture; ICREA, one of Mexico’s special and corporate event specialists; and Centro Citibanamex, an exhibition and convention center in Mexico City.

Soberón Kuri will serve as CEO and sit on the board of the newly-formed joint venture. Rapino will become Chairman of the venture’s board of directors.

Live Nation is also considering various options to finance the purchase price for the acquisition, which include the issuance of equity securities subject to market conditions.

LionTree Advisors served as financial advisor to Live Nation in connection with the transaction.

OCESA promotes more than 3,100 events for nearly 6 million fans in a typical year across Mexico and Colombia and operates 13 premier venues across Mexico with a collective capacity of nearly 250,000 seats.

OCESA promotes concerts for some of the world’s biggest artists, including Coldplay, Paul McCartney, and U2 as well as some of the largest festivals in Latin America like Corona Capital, Pal Norte, and EDC Mexico, the latter of which OCESA is a core partner of, alongside Insomniac, a subsidiary of Live Nation.

“After serving as Live Nation’s touring, festival, and ticketing partner in Mexico for years, we know OCESA is a stellar business with deep roots in live entertainment in Mexico.”

Michael Rapino, Live Nation Entertainment

Commenting on the deal in a press release issued today, Michael Rapino, President and CEO, Live Nation Entertainment, said:  “After serving as Live Nation’s touring, festival, and ticketing partner in Mexico for years, we know OCESA is a stellar business with deep roots in live entertainment in Mexico.

“Alex has built a remarkable company and as we continue to build on the return to live, OCESA will play a pivotal role in putting together many incredible shows in Mexico and the rest of Latin America.”

“We are extremely proud to finally join Live Nation.”

Alejandro Soberón Kuri, CIE

Alejandro Soberón Kuri, President and CEO of CIE, said: “We are extremely proud to finally join Live Nation.

“This is a natural evolution of our long-standing relationship and it gives us a unique opportunity to continue OCESA´s 30-year contribution to the development of the Mexican live entertainment industry.

“Additionally, it will help us foster CIE´s commitment to the promotion of Mexican artistic talent abroad.”

Last month, following a miserable pandemic year for the live music business, Live Nation reported that its revenues increased by $501.9 million, or 677%, year-on-year, to $575.9 million in Q2 2021, up from $74.1m in Q2 2020.

Live Nation pinned its positive results in Q2 on both strong ticket sales and sponsorship commitments for 2022, the latter of which it reports are up double digits from 2019.Music Business Worldwide