SFX Chairman Offers To Buy Company For $3.25 Per Share; Stock Skyrockets

• Shares of SFX Entertainment Inc SFXE surged higher by nearly 30 percent Friday morning.
• The company's Chairman and CEO Robert Sillerman offered to acquire the remainder of the company he doesn't already own for up to $3.25 per share.
• The proposed transaction is subject to the approval of the Board of Directors and a special committee of independent directions will consider the offer make a recommendation.

Shares of SFX Entertainment, a small-cap media company that is a producer of life events and digital entertainment content focused on the electronic music culture, saw its shares trading at $1.34 at 10:10 a.m. ET on Friday, up 28.85 percent.

SFX Entertainment's Chairman and CEO Robert Sillerman offered to acquire the remainder of the company he already doesn't own for up to $3.25 per share. As part of the deal, investors would receive up to $2.25 in cash per share and a non-tradeable contingent payment right entitling the investor to receive up to an additional $1.00 per share in cash upon a future sale of the company.

Sillerman attempted a similar transaction in February to take the company private but failed to do so.

The new proposed takeout offer is still meaningfully below the stock's 52-week high of $5.69. In fact, shares have lost more than 70 percent over the past year.

The company has been named in the past as a potential acquisition target. In August, Rich Tullo of Albert Fried said that shares are "dramatically undervalued" and a "good fit" for MSG Networks Inc MSGN.

The analyst also told Billboard on October 13 that shares are valued at $4, but there is a "credibility gap" between management and investors which explains the deflated stock price. He suggested that the "most probable" outcome would be the company selling some of its non-core assets, such as Beatport – an online music store with a strong brand that can fetch an attractive price in a sale.

According to a company press release, a special committee of independent directors will evaluate Sillerman's proposal and make a recommendation t the Board. The release also noted that Sillerman would not proceed with the proposed transaction unless it was approved and will also be subject to approval by holders of a majority of the shares of the company common stock not beneficially owned by him.