Earlier this month, reports indicated that the Justice Department had launched an antitrust investigation into Live Nation (NYSE: LYV). Now, a Citigroup analyst believes there’s an 80 percent chance that the promoter and its Ticketmaster subsidiary will continue operating as a single business despite the probe.
Citi’s Jason Bazinet just recently voiced his view of the Live Nation DoJ investigation’s outcome as part of a broader analysis of LYV’s path forward. For reference, notwithstanding the avalanche of criticism directed at Live Nation and Ticketmaster (by fans as well as lawmakers) as of late, the Justice Department inquiry is said to predate the Taylor Swift Eras Tour fiasco by several months.
Moreover, Live Nation, which merged with Ticketmaster in 2010, appeared to post solid Q3 earnings and has faced calls to be broken up into a standalone operation from multiple activists on the year. Meanwhile, Ticketmaster itself has generated controversy over its “platinum” pricing and the availability of tickets to tours besides Swift’s forthcoming concert series.
Bearing in mind these pertinent background details, Bazinet has expressed the belief that the unwinding of the Live Nation-Ticketmaster merger is unlikely in spite of the DoJ scrutiny.
But with the financial professional having nevertheless relayed that there’s a 20 percent chance the merger will in fact be undone, he likewise took the opportunity to comment on the potential valuation and operational implications of a separation.
“If the DoJ seeks to unwind the merger – and is successful – we believe: standalone Live Nation would fetch 13.5x EV-EBITDA; standalone Ticketmaster would fetch 8.0x EV-EBITDA; and the firm would incur $100 million of dis-synergies,” the nearly two-decade Citi team member Bazinet penned.
Regarding the possible impact on the price of LYV, which has suffered an almost 40 percent slip since 2022’s beginning, Bazinet predicted that the stock will be worth $90 per share if the divisions remain united and $48 per share if they split.
Ahead of the release of more concrete details about the DoJ probe, though, the Citi analyst has upped his LYV rating from neutral to buy – albeit while setting a reduced target price of $82. During today’s trading hours, the value of Live Nation stock increased by 3.63 percent from Tuesday’s close to finish at $72.76 per share.
The figure reflects a 7.54 percent boost across the past five trading days but an 8.40 percent dip during the last month. In October, the Beverly Hills-based promoter acquired a “significant equity stake” in Washington, D.C.’s Broccoli City Festival.