Entertainment

Saudi Arabia buys $500 million stake in coronavirus-hit Live Nation, stock jumps nearly 10%

Key Points
  • Shares of Live Nation popped about 10% on Monday on the news that Saudi Arabia's sovereign wealth fund bought a 5.7% stake in the American events company, which is parent to Ticketmaster. 
  • Saudi Arabia's investment makes the kingdom's Public Investment Fund the third-largest shareholder in the company after Liberty Media Corp and Vanguard Group.
  • The purchase follows numerous reports of the Saudi wealth fund buying stakes in companies whose stock prices have been obliterated by the Covid-19 pandemic.
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Shares of Live Nation popped about 10% on Monday on the news that Saudi Arabia's sovereign wealth fund bought a 5.7% stake in the American events company, which is parent to Ticketmaster. 

The stake, worth about $518 million based on the company's current stock price, comprises 12,337,569 shares, according to a filing with the Securities and Exchange Commission on Monday. The purchase by Saudi Arabia's Public Investment Fund comes as Live Nation — the world's largest concert and events promoter — is seeing revenues vanish as the coronavirus pandemic hammers the events industry and the global economy. 

Live Nation's stock price closed at $42.01 on Monday, up 9.86% from the previous day. With prospects for concerts dashed for what may be the rest of the year or longer, the stock is down more than 40% year-to-date. The company is currently implementing hiring freezes and furloughs, and has implemented 50% pay cuts for top executives, with its CEO Michael Rapino nixing his full salary. 

Saudi Arabia's investment makes its Public Investment Fund the third-largest shareholder in the company after Liberty Media Corp and Vanguard Group.

The purchase follows numerous reports of the Saudi wealth fund buying stakes in companies whose stock prices have been obliterated by the Covid-19 pandemic and ensuing lockdowns around the world. 

PIF (Public Investment Fund) Managing Director Yasir bin Othman Al-Rumayyan attends the Russian-Saudi Investment Forum held at the Ritz-Carlton Moscow Hotel.
Sergei Bobylev | TASS via Getty Images

In early April, the Saudi fund disclosed an 8.2% stake in the beleaguered cruise operator Carnival Corp, sending that company's shares up nearly 30% on the day the news was announced. Saudi Arabia is now the second-largest stakeholder in what is the world's largest cruise company after its chairman, Micky Arison, who owns a roughly 16% stake.

Carnival has lost 75% of its value year-to-date amid the worldwide halt in leisure travel and several disastrous coronavirus outbreaks on its cruise ships.

The news also comes after reports that the Public Investment Fund bought stakes in four major European oil companies, though the reports have not been confirmed by the wealth fund and it has not commented publicly on the matter. 

The apparent investment spree has even extended to sports — the Saudi fund is currently said to be in the final stages of a deal to take over Britain's Newcastle United soccer club with an 80% stake worth £300 million ($372 million).

The Public Investment Fund is the kingdom's primary vehicle for expanding its domestic and international investments and is a key part of Saudi Crown Prince Mohammed bin Salman's Vision 2030, which is aimed at diversifying the country's economy away from oil reliance. It oversees more than $300 billion in assets and has stakes in numerous major companies ranging from Uber and electric vehicle company Lucid Motors to a $45 billion investment in Softbank's $100 billion Vision Fund.