The Madison Square Garden Company disclosed its decision to separate its live sports and entertainment business from its media business in a regulatory filing with the Securities and Exchange Commission (SEC) today.
The company previously announced that it was exploring a possible separation its businesses into two publicly-traded companies.
In a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More
The Madison Square Garden said the separation would be structured as a tax-spree spin-off of the sports and entertainment business to its shareholders on a pro rata basis.
The shareholders of the company will own shares in both businesses. They can evaluate the current and future prospects of each business in making investment decisions.
The board of directors of the company believes that spinoff will further enhance the long-term value creation of its businesses. A separation will also provide each business with increased strategic flexibility to pursue its distinctive plan. It will also allow each business to have appropriate capital structure and return policy.
The Madison Square Garden said both businesses will still continue to benefit from commercial arrangements between them. The company expects to complete the spin-off this year, subject to certain conditions.
The live sports & entertainment company will be composed of celebrated venues, legendary sports teams, and exclusive entertainment productions.
On the other hand, the media company will continue to distribute exclusive, award-winning sports and entertainment content across multiple platforms including the MSG Network and MSG+.
The Madison Square Garden said the two companies are expected to enter into long-term media rights agreement in connection with the spinoff. The agreements will ensure that MSG Network and MSG+ continue to serve as the exclusive local broadcast home of the Knicks and Rangers.
Madison Square Garden stock performance
The shares Madison Square Garden increased nearly 5% to $84.70 per share at the time of this writing around 3:14 in the afternoon in New York.
The stock price of the company climbed from $48.16 to $77.27 per share over the past 52-weeks. The company gained more than 49% in stock value over the past year.
Stifel raised their price target for the stock to $90 per share. Morgan Stanley increased its price target to $94 per share and issued an Overweight rating for Madison Square Garden.