Robert F.X. Sillerman, Chairman and CEO of SFX Entertainment, submitted a non-binding letter to the board of directors to consider his proposal to acquire the shares of the company that he does not already own.

The stock price of the SFX Entertainment surged more than 23% to $1.28 per share at the time of this writing around 11:49 AM in New York.

SFX Entertainment

Proposal for SFX Entertainment

In his letter to the board of directors of SFX Entertainment, Mr. Sillerman offered to acquire the remaining shares of the company he does not already own for as much as $3.25 per share through one of more acquisition vehicles.

Based on Mr. Sillerman’s latest 13D filing with the Securities and Exchange Commission (SEC), he currently owns 38.836,818 shares or 39% of SFX Entertainment.

Under the proposed transaction, the shareholders of the company will receive a cash of $2.25 per share and a non-tradeable contingent payment right (CPR) after the closing. The CPR entitles the holder to receive an additional cash of $1.00 per share upon a future sale of the company.

The holders of the CPR will receive a total of 10% of the common equity value of SFX Entertainment based on the price paid in such sale up to an aggregate $100 million. If not sold within five years after the closing of the transaction, the holders will receive 10% of the appraised common equity value of the company.

The upfront payment will be composed of $1.75 plus 100% of the payment to be received by Mr. Sillerman applied pro rata to all shareholders, up to $50 million for the credit and other support he provided to SFX Entertainment.

Sillerman ready to negotiate and execute a definitive agreement

According to Mr. Sillerman, his proposal is not subject to receipt of financing although he may partner with one or more entities of people to make the acquisition. He will submit a letter from one or more of his regular banks confirming the availability of funds.

“I am prepared to move expeditiously towards the negotiation and execution of definitive agreements for my proposed acquisition transaction. No further diligence review or analysis is required,” said Mr. Sillerman.

Mr. Sillerman’s proposal is subject to the approval of the Special Committee of the Board and shareholders representing a majority of the outstanding shares of SFX Corporation.